Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is
A)0.82,and basketball tickets are a normal good.
B)0.82,and basketball tickets are an inferior good.
C)1.22,and basketball tickets are a normal good.
D)1.22,and basketball tickets are an inferior good.

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated by the percentage change in quantity demanded divided by the percentage change in income. From $50,000 to $60,000, there is a 25% increase in income and a 25% increase in quantity demanded (20 to 25 tickets), resulting in an income elasticity of demand of 1. Therefore, basketball tickets are a normal good. The correct numerical value is 1.22, which is not provided in any of the answer choices.

Charles Purchases 20 Basketball Tickets Per Year When His Annual