Register
If a 10 percent increase in income induced a group of consumers to reduce their yearly purchases of eggs by 5 percent, for these consumers, Group of answer choices the income elasticity of eggs equals
307,182 views
1 vote
1 vote
If a 10 percent increase in income induced a group of consumers to reduce their yearly purchases of eggs by 5 percent, for these consumers, Group of answer choices the income elasticity of eggs equals approximately 1.05. the income elasticity of eggs is 0.5. eggs are a luxury good. eggs are an inferior good.

User Rhlsthrm
by
2.6k points

1 Answer

18 votes
18 votes

Answer:

the income elasticity of eggs is 0.5.

Step-by-step explanation:

Inferior goods are goods whose demand falls when income rises and increases when income falls.

Income elasticity of demand measures the responsiveness of quantity demanded to changes in income.

income elasticity = percentage change in quantity demanded / percentage change in income

5/10 = 0.5

If the absolute value of income elasticity of demand is greater than one, it means demand is elastic.

If the absolute value of income elasticity of demand is less than one, it means demand is inelastic.

User Esti
by
3.1k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
If you buy a one-year bond for $4,000 and the issuer pays you back $5,000 at the end of one year, the interest rate on the bond is
The market value of the equity of Hudgins, Inc., is $582,000. The balance sheet shows $21,000 in cash and $192,000 in debt, while the income statement has EBIT of $93,000 and a total of $137,000 in depreciation
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
Elroy Rocket is entering his senior year as an accounting major and has a number of options for his summer break. His options for the 3 month break follow: (1) Work full time at a local accounting firm
Link Copied!