Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good A.
Table 5.6

Quantity
Income
Good A

100
$1,000
120

$2,000
Good B
200
$20
140
$35
A)1
B)2/9
C)3/11
D)11/3
E)9/2

Question

Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good A.​ ​
Table 5.6
​
​
Quantity
Income
Good A
​
100
$1,000
120
​
$2,000
Good B
200
$20
140
$35
A)1
B)2/9
C)3/11
D)11/3
E)9/2

Quizplus · Accepted Answer

To calculate the income elasticity of demand for Good A, we need to use the formula:

% Change in quantity demanded of Good A / % Change in income

We can use the information in Table 5.6 to find these percentages:

% Change in quantity demanded of Good A = (120-100)/100 = 0.2 = 20%
% Change in income = ($2,000-$1,000)/$1,000 = 1 = 100%

Plugging these values into the formula, we get:

Income elasticity of demand for Good A = 20%/100% = 0.2

Simplifying this fraction, we get:

Income elasticity of demand for Good A = 3/11

Therefore, the best answer choice is C.

Table 56 Shows the Change in the Quantity Demanded for Good