Question

When Mohesha receives an increase in her pay check from​ $1,800 a month to​ $2,200 a​ month, she increases the quantity of hot chocolate that she buys from 19 cups a month to 21 cups a month. ​Mohesha's demand for hot chocolate is income​ ______. For​ Mohesha, hot chocolate is​ ______ good.

Answer 1

The answer is

Income inelastic

The chocolate is a normal good.

Step-by-step explanation:

First lets find the percentage increase or decrease in income and demand.

For income:

($2,200 -$1,800)÷$1,800

=$400÷$1,800

=0.2222 or 22.22%

For the demand

(21cups-19cups)÷19cups

=0.1053 or 10.53.

A 22.22% increase in income leads to 10.53% in demand of hot chocolate. This means it is less proportional. The demand is less sensitive to his income.

The hot chocolate is a normal good. If not an increase in income would have resulted to a lower demand for hot chocolate.