Use the following to answer questions:
-(Table: Market for Pizza) If income changes from $1,000 to $1,400 per month, by the midpoint method, the income elasticity of demand at a price of $10 per pizza is:
A) 1.2
B) -1.2
C) 0.825
D) 0.40

Question

Use the following to answer questions: 
-(Table: Market for Pizza) If income changes from $1,000 to $1,400 per month, by the midpoint method, the income elasticity of demand at a price of $10 per pizza is:
A) 1.2 
B) -1.2 
C) 0.825 
D) 0.40

Quizplus · Accepted Answer

The income elasticity of demand is calculated using the midpoint method formula: [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(I2 - I1) / ((I2 + I1)/2)]. Given the options, 1.2 is the correct elasticity value.

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