Question

Suppose the monthly income of an individual increases from Rs. 10,000 to Rs. 15,000 which increases his demand for clothes from 20 units to 25 units. Calculate the income elasticity of demand

Answer 1

Answer:

Ey = change in quantity / change in income x initial income / initial quantity

here,

change in income = 5 k rs

change in quantity = 5 units

initial income = 10 k rs

initial quantity = 20 units

Apply formula:

Ey = 5/5 x 10/20

=0.5

Explanation:

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Answer 2

Answer:

2025

Explanation: