Answer to Question #82958 in Microeconomics for Eder

Question #82958

The income elasticity is +2.5 and income increases by 20%. Sales were 5000 units, what will they be now?

Expert's answer

If the income elasticity is +2.5, income increases by 20% and sales were 5000 units, then the sales will increase by 20%*2.5 = 50% to 7500 units.

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