Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.

-Refer to Table 5-2.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Question

Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-2.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Quizplus · Accepted Answer

The midpoint method calculates elasticity using the average of the initial and final values. The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. If the quantity demanded changes proportionally with income, the elasticity is 1.00.

Table 5-2 The Following Table Shows a Portion of the Demand Schedule