Last year, after Shirley received a 14 percent pay increase, she increased the quantity of pork chops she purchased by 6 percent. Hence, her income elasticity of demand for pork chops equals
A) 0.43.
B) -0.43.
C) 2.33.
D) -2.33

Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. In this case, the percentage change in quantity demanded is 6% and the percentage change in income is 14%. Therefore, the income elasticity of demand is 6% / 14% = 0.43.

Last Year, After Shirley Received a 14 Percent Pay Increase