객관식
Johnny Clutch just got a raise from \$900 per week to \$1100 per week. As a result, he decreases the amount of ramen noodles he buys from seven cartons a week to one carton a week. For Johnny, ramen noodles are:
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4. Elasticity
Income Elasticity of Demand
객관식
A twelve percent increase in consumer income has caused the quantity of orange juice demanded to increase from 24,000 to 26,000. The income elasticity of demand for orange juice is:
A
0.25
B
0.33
C
0.50
D
0.67
검증된 단계별 안내1
Understand the concept of income elasticity of demand, which measures how the quantity demanded of a good responds to a change in consumer income. It is calculated as the percentage change in quantity demanded divided by the percentage change in income.
Calculate the percentage change in quantity demanded. The formula is: \( \frac{\text{New Quantity} - \text{Old Quantity}}{\text{Old Quantity}} \times 100 \). Substitute the given values: \( \frac{26,000 - 24,000}{24,000} \times 100 \).
Calculate the percentage change in income. The problem states a 12% increase in consumer income, so this value is directly given as 12%.
Use the formula for income elasticity of demand: \( E_d = \frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Income}} \). Substitute the values obtained from the previous steps.
Interpret the result: A positive income elasticity greater than zero indicates that orange juice is a normal good, meaning demand increases as income increases.
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