If Jack bought 21 CDs last year when his income was $30,000 and he buys 23 CDs this year when his income is $35,000,then his income elasticity of demand is ______________ which means that CDs are a(n)______________ good for Jack.
A) +1.69; normal
B) -1.69; inferior
C) +0.59; normal
D) +0.59; inferior
E) -0.44; inferior

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. The percentage change in quantity is (23-21)/21 = 0.0952, and the percentage change in income is (35000-30000)/30000 = 0.1667. The elasticity is 0.0952/0.1667 = 0.57, which is approximately +0.59, indicating CDs are a normal good.

If Jack Bought 21 CDs Last Year When His Income