Janelle recently received a promotion at her job, increasing her income from $940 per week to $1,060 per week. As a result, she decides to purchase 9% more sushi per week. Computed using the midpoint method, the income elasticity of Janelle's demand for sushi is:
A)0.75.
B)1.33.
C)0.90.
D)1.00.

Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in income). The percentage change in income is [(1060 - 940) / ((1060 + 940) / 2)] * 100 = 11.11%. The percentage change in quantity demanded is 9%. Therefore, the income elasticity is 9% / 11.11% = 0.81, which is closest to 0.75.

Janelle Recently Received a Promotion at Her Job, Increasing Her