Question #113212

b)Mr.Ali has an income of Rs.30,000 and he purchases 100 units of X-GOOD. His income decreases by 20% and now he can purchase 90 units of X-GOOD.Calculate Calculate elasticity and also mention the type of elasticity.

Expert's answer

The income elasticity of demand is computed as:

The percentage change in demand is:

If the income decreases by 20%, the income elasticity of demand is equal to:

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