Q.2.1 Suppose that the management of Sun City resort is trying to understand the income elasticity of their resort. As an advisor, they provide you with the following figures; If the average income of visitors is R3 000 (which is the current income), then 45 000 visitors visit Sun City resort each year and if the average income increases to R5 000, then 60 000 visitors visit Sun City resort each year. Q.2.1.1 Calculate the income elasticity of demand using the arc method. (5) Q.2.1.2 Based on your answer above (Q.2.1.1), explain what type of a product (service) the resort is.
Q.2.1 Suppose that the management of Sun City resort is trying to understand the
income elasticity of their resort. As an advisor, they provide you with the
following figures;
If the average income of visitors is R3 000 (which is the current income), then
45 000 visitors visit Sun City resort each year and if the average income
increases to R5 000, then 60 000 visitors visit Sun City resort each year.
Q.2.1.1 Calculate the income
Q.2.1.2 Based on your answer above (Q.2.1.1), explain what type of a
product (service) the resort is.
In the arc method, :
Income Elasticity =
Income elasticity refers to the responsiveness of changes in demand with respect to change in income level .
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