Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good B.
Table 5.6

Quantity
Income
Good A

100
$1,000
120

$2,000
Good B
200
$20
140
$35
A)-11/17
B)17/9
C)10/3
D)-3/10
E)1

Question

Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good B.​ ​
Table 5.6
​
​
Quantity
Income
Good A
​
100
$1,000
120
​
$2,000
Good B
200
$20
140
$35
A)-11/17
B)17/9
C)10/3
D)-3/10
E)1

Quizplus · Accepted Answer

The income elasticity of demand for Good B can be calculated using the formula:
% change in quantity demanded of Good B/% change in income
From the table, we can see that the quantity demanded of Good B has increased by (140-200)/200 = -0.3, or 30%, while income has increased from $20 to $35, or 75%. Therefore, the income elasticity of demand for Good B is:
-0.3/0.75 = -0.4/1 = -11/17
So the best choice is A), -11/17.

Table 56 Shows the Change in the Quantity Demanded for Good