Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is
A) 0.5.
B) 0.75.
C) 1.5
D) 2.

Name: Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is A) 0.5. B) 0.75. C) 1.5 D) 2.
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Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it's (7.5% / 15%) = 0.5.

Sally Recently Got a 15 Percent Raise