-Use the above table. The income elasticity of artisan bread is
A) 1.285.
B) 0.780.
C) 0.012.
D) 8.330.

Question

-Use the above table. The income elasticity of artisan bread is
A) 1.285. 
B) 0.780. 
C) 0.012. 
D) 8.330.

Quizplus · Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. A value greater than 1 indicates a luxury good, which artisan bread likely is, given its high elasticity of 1.285. This suggests that demand for artisan bread increases more than proportionally as income increases.

-Use the Above Table