uppose a low-income family that earns K750 per month consumes 8 Kgs of Hamburgers and 2 Kgs of Beef in Month 1. However, in month 2 when the income of the family rises to K950, the quantity of Hamburgers consumed by the family reduces to 5 Kgs while the quantity of Beef increases to 4Kgs. Your answer 1 (i) What is the income elasticity of demand for hamburger? 1 (ii) What is the income elasticity of demand for steak? 1 (iii) Which of the two goods is an inferior
uppose a low-income family that earns K750 per month consumes 8 Kgs of Hamburgers and 2 Kgs of Beef in Month 1. However, in month 2 when the income of the family rises to K950, the quantity of Hamburgers consumed by the family reduces to 5 Kgs while the quantity of Beef increases to 4Kgs. Your answer 1 (i) What is the income elasticity of demand for hamburger? 1 (ii) What is the income elasticity of demand for steak? 1 (iii) Which of the two goods is an inferior
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
uppose a low-income family that earns K750 per month consumes 8 Kgs of Hamburgers and 2 Kgs of Beef in Month 1. However, in month 2 when the income of the family rises to K950, the quantity of Hamburgers consumed by the family reduces to 5 Kgs while the quantity of Beef increases to 4Kgs.
Your answer
1 (i) What is the income elasticity of demand for hamburger?
1 (ii) What is the income elasticity of demand for steak?
1 (iii) Which of the two goods is an inferior good?
Expert Solution
Step 1
Income elasticity of demand measures the change in quantity of good due to change in the income of the consumer. If income elasticity of demand is negative then good are Inferior good on the other if income elasticity of demand is positive then good are Normal good.
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