9.6k views
4 votes
When income is ?$400400 per? week, 33 nights dining outnights dining out are demanded. when income is ?$600600 per? week, 55 nights dining outnights dining out are demanded. the income elasticity of demand for nights dining outnights dining out ?equals:?

User Drewlio
by
8.0k points

1 Answer

2 votes

In economics, income elasticity of demand measures the response of the number demanded for a good or service to a change in the income of the people demanding the good or service. The formula for calculating this metric is:

Income Elasticity Demand = Change in Quantity Demanded / Change in Income

Income Elasticity Demand = 55 nights – 33 nights / $600 - $400

Income Elasticity Demand = 0.11 = 11%

Since Income Elasticity Demand is 0.11 or 11% (positive number), therefore this means that an increase in income of the people leads to an increase in the demand of nights dining out.

User Scaryrawr
by
7.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.