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indocheri
Mar 23, 2008, 05:06 PM
If there has been a 10 percent increase in consumer income between two periods, what was the percentage change in the demand for tobacco products and flour? Where income elasticity for these products is given as .50 and -0.36 respectively.

How do I use this in the income elasticity demand formula :

E. of I = change in Q/Q over change in I/I

Thank you.

Vivi1987
Mar 25, 2008, 12:48 AM
Price ealasticity = % change in quantity (Formula)
% change in the price

% change in quantity= change in quantity (Step 1)
avarage quantity

% change in price = change in price (Step 2)
average price