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    indocheri's Avatar
    indocheri Posts: 1, Reputation: 1
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    #1

    Mar 23, 2008, 05:06 PM
    income elasticity
    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's Avatar
    Vivi1987 Posts: 11, Reputation: 1
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    #2

    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
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