Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose that Devon's total income rises from $35 to $55,ceteris paribus.Given that Devon changes his choice of windsurfing and snorkeling,what is his income elasticity for windsurfing?
A)zero
B)28.6
C)44.4
D)0.64
E)1.55

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in income. It is calculated as the percentage change in quantity demanded divided by the percentage change in income. Given that Devon changes his choice of windsurfing and snorkeling when his income rises, and without specific numbers on how much more he consumes, we cannot calculate the exact elasticity. However, the fact that he changes his consumption pattern suggests that windsurfing has a positive income elasticity, indicating it is a normal good. Among the provided options, 0.64 (D) is a reasonable positive value indicating a less than proportionate response, which is typical for many goods.

Consider Devon's Total Utility from Snorkeling and Windsurfing in Table