Question

Suppose that after hurricane lrene, the average income in Cape Charles, Virginia decreased by 6 percent. In response to this change in income, suppose the quantity of steak demanded in Cape Charles (holding the price of steak constant) decreased by 16 percent. What is the income elasticity of demand for steak in Cape Charles? The income elasticity of demand for steak in Cape Charles is. (Enter your response rounded to two decimal places.) In this instance, steak in Cape Charles is .

Answer 1

Formula for income elasticity = %change in demand/%change in price

= 16%/6%

= The income elasticity of steak in Cape Charles is 2.66 which means that one percent change of income will change the quantity demanded by 2.66%

Step-by-step explanation: