(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican Take-Out. If income changes from $1,000 to $1,400 per month, the income elasticity of demand, computed using the midpoint method at a price of $18 per Mexican take-out meal, is: $\text { Table: Market for Mexican Take-Out }$
$\begin{array} { | l | l | l | }
\hline \text { Price (per meal) } & \begin{array} { l }
\text { Quantity of Meals Demanded } \
\text { (income } = \$ 1,000 \text { per month) }
\end{array} & \begin{array} { l }
\text { Quantity of Meals Demanded } \
\text { (income } \$ 1,400 \text { per month) }
\end{array} \
\hline 20 & 3 & 7 \
\hline 18 & 4 & 8 \
\hline 16 & 5 & 9 \
\hline 14 & 6 & 10 \
\hline 12 & 7 & 11 \
\hline 10 & 8 & 12 \
\hline 8 & 9 & 13 \
\hline 6 & 10 & 14 \
\hline
\end{array}$
A)0.33.
B)0.50.
C)0.95.
D)2.

Question

(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican Take-Out. If income changes from $1,000 to $1,400 per month, the income elasticity of demand, computed using the midpoint method at a price of $18 per Mexican take-out meal, is: $\text { Table: Market for Mexican Take-Out }$
$\begin{array} { | l | l | l | } 
\hline \text { Price (per meal) } & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } = \$ 1,000 \text { per month) }
\end{array} & \begin{array} { l } 
\text { Quantity of Meals Demanded } \
\text { (income } \$ 1,400 \text { per month) }
\end{array} \
\hline 20 & 3 & 7 \
\hline 18 & 4 & 8 \
\hline 16 & 5 & 9 \
\hline 14 & 6 & 10 \
\hline 12 & 7 & 11 \
\hline 10 & 8 & 12 \
\hline 8 & 9 & 13 \
\hline 6 & 10 & 14 \
\hline
\end{array}$
A)0.33.
B)0.50.
C)0.95.
D)2.

Quizplus · Accepted Answer

The income elasticity of demand is calculated using the formula: $\text{Income Elasticity} = \frac{\% \text{ Change in Quantity Demanded}}{\% \text{ Change in Income}}$. Using the midpoint method for a price of $18 per meal, the quantity demanded increases from 4 to 8 meals as income increases from $1,000 to $1,400. The percentage change in quantity demanded is $\frac{8 - 4}{(8 + 4)/2} = \frac{4}{6} = 0.67$ or 67%, and the percentage change in income is $\frac{1,400 - 1,000}{(1,400 + 1,000)/2} = \frac{400}{1,200} = 0.33$ or 33%. Thus, the income elasticity of demand is $\frac{0.67}{0.33} = 2$.

(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican Table: Market for Mexican Take-Out \text { Table: Market for Mexican Take-Out } Table: Market for Mexican Take-Out

(Table: Market for Mexican Take-Out) Use Figure: Market for Mexican $\text { Table: Market for Mexican Take-Out }$