Question

A consumer's weekly income is $300, and the consumer buys 5 bars of chocolate per week. When income increases to $330, the consumer buys 6 bars per week. The income elasticity of demand for chocolate by this consumer is about__________.

Answer 1

Answer:

The income elasticity of demand for chocolate by this consumer is about 1.90

Explanation:

the change in quantity = (6 - 5)/(6 + 5)

                                      = 0.091

the change in income = (330 - 300)/(330 + 300)

                                     = 0.048

the income elasticity = 0.091/0.048

                                   = 1.90

Therefore, The income elasticity of demand for chocolate by this consumer is about 1.90