You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles,
A) yours would be negative and your roommate's would be positive.
B) yours would be positive and your roommate's would be negative.
C) yours would be zero and your roommate's would approach infinity.
D) yours would approach infinity and your roommate's would be zero.

Question

Quizplus · Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good responds to a change in income. If you buy more Ramen noodles as your income increases, your income elasticity is positive. If your roommate buys fewer Ramen noodles as her income increases, her income elasticity is negative.

You and Your College Roommate Eat Three Packages of Ramen