Chapter 5, Problem 8P

To determine

The income elasticity for the goods at different income level.

Concept Introduction:

Income Elasticity of Demand: It is the degree of responsiveness to change in quantity demanded due to change in income of a consumer.

The formula for measuring income elasticity of demand is given as follows:

$e=\frac{\Delta Q}{\Delta I}\times \left[\frac{I_1}{Q_1}\right]$

Where,

$\Delta Q=Q_2-Q_1$

$\Delta I=I_2-I_1$