Economy, asked by ciyapradhan, 1 year ago

if demand increased by 50percent due to an increase in income by 75% calculate the income elasticity of demand​

Answers

Answered by DebjaniC
7

Answer:

2/3

Explanation:

The income elasticity of demand is the percentage change in demand due to percentage change in income. This is given as

e_d=\frac{\% \textup{change in demand}}{\% \textup{change in income}}

Given changes the income elasticity of demand is

e_I=\frac{0.50}{0.75} =\frac{2}{3}


ciyapradhan: Thank you so much for your help.
Niruru: But my answer is different.
Answered by Niruru
32
\bf {Given :-}

% change in quantity demanded = 50%

% change in price = 75%

(In the question, it is mentioned that % change in income is 75% but it would be taken as % change in price because income of the consumer has direct impact on price of the commodity.)

Elasticity of demand (Ed) = ?

ed = ( - )\frac{\% \: change \: in \: quantity \: demanded}{\% \: change \: in \: price} \\ \\ ed = ( - ) \frac{50}{75} \\ \\ ed = ( - )0.6

\boxed {Ed = (-)0.6} \bf\green {Answer}
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