Microeconomics

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Elasticity

Income Elasticity of Demand

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Income Elasticity of Demand helps us identify normal goods and inferior goods.

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concept

Income Elasticity of Demand

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Problem

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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Problem

Johnny Clutch just got a raise from $950 per week to $1,050 per week. As a result, he increases the number of concerts he attends by five percent. His demand for concerts is:

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Problem

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: