If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________.
A) 0.33
B) 0
C) negative
D) 3.00

Question

Quizplus · Accepted Answer

Income Elasticity of Demand = % Change in Quantity Demanded / % Change in Income
Given, % Change in Income = 2%
% Change in Quantity Demanded = 6%
Therefore, Income Elasticity of Demand = 6%/2% = 3.00

If When Income Increases by 2 Percent and the Price