Suppose the monthly income of a consumer decrease from ₹15,000 to ₹10,000. His demand for clothes changes from 70 units to 40 units. Calculate income elasticity of demand. Comment on the elasticity type and derive the curve.
Answers
Answered by
0
Answer:
Income elasticity of demand is the responsiveness of quantity demanded for clothes to change in income of the consumer.
Given,
change in income (\DeltaΔI) = 5000 (15000-10000)
and
change in quantity demanded of clothes (\DeltaΔ Qd) = 5 (25-20)
Initial income ( I) = 10000
Initial quantity demanded of clothes (Qd) = 20
Income elasticity of demand is calculated as:
(\DeltaΔ Qd/Qd )/ (\DeltaΔI/I)= (5/20)/(5000/10000)
= (1/4)/ (1/2)
IED = 0.5
Answered by
0
Answer:
Explanatio 240000:
Similar questions