Last year,Sheila bought 6 pairs of shoes when her income was $40,000.This year,her income is $52,000 and she purchased 7 pairs of shoes.Holding other factors constant and using the midpoint method,it follows that Sheila's income elasticity of demand is about
A) 0.59,and Sheila regards shoes as an inferior good.
B) 0.59,and Sheila regards shoes as a normal good.
C) 1.7,and Sheila regards shoes as an inferior good.
D) 1.7,and Sheila regards shoes as a normal good.

Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated using the midpoint method: [(7-6)/((7+6)/2)] / [(52000-40000)/((52000+40000)/2)] = 0.59. Since the elasticity is positive, shoes are a normal good for Sheila.

Last Year,Sheila Bought 6 Pairs of Shoes When Her Income