If Jack bought 21 DVDs last year when his income was $30,000 and he buys 23 DVDs this year when his income is $35,000, then his
income elasticity of demand is ______________ which means that DVDs are a(n) ______________ good for Jack.
2 answers:
Answer: 0.57; Normal good
Explanation:
Income elasticity of demand is an economic term that depicts the connection that exist between the income of a consumer and the consumer's demand of a product. When there is an increase or decrease in the income of a consumer, the consumer's income elasticity of demand will show if he will buy a product or not.
After the calculation which is shown in the attached file, the income elasticity of demand gotten is 0.57. This means that DVD is a normal good to Jack. For a normal good, the income elasticity of demand is positive but less than one.
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