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Income elasticity of demand

calculate the income elasticity of demand for food if an increase in income from £25,000 to £30,000 leads to an increase in the quantity demanded of food of 10%.
please show all working
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Why not try posting in a specific subject forum- you might have more luck there.

Here's a link to our subject forum which should help get you more responses. :redface:

:h:
Reply 2
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Zacken
22
Moved to Econ.
Reply 3
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Zacken
22
Original post by Deen Meah
calculate the income elasticity of demand for food if an increase in income from £25,000 to £30,000 leads to an increase in the quantity demanded of food of 10%.
please show all working


We know that: ϵY=%change in demand%change in income\displaystyle \epsilon_Y = \frac{\%\text{change in demand}}{\% \text{change in income}}, in this case, we have: ϵY=10%change in income\displaystyle \epsilon_Y = \frac{10}{\% \text{change in income}}.

So, can you calculate the % change in income? Do you remember how to? New income - original income all over original income * 100, ring a bell?
Reply 4
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MasonM
14
I found this online..

The formula for calculating income elasticity is:
% Change in demand divided by the % change in income

So we know the demand is +10%

And the income % change is worked out by taking £30,000 and dividing it by £25,000 which = 1.2 x 100 = +120% or + 20%

10/20 = 0.5

That should be your answer :smile:
(edited 8 years ago)
Original post by Zacken
We know that: ϵY=%change in demand%change in income\displaystyle \epsilon_Y = \frac{\%\text{change in demand}}{\% \text{change in income}}, in this case, we have:
Unparseable latex formula:

\displaystyle \epsilon_Y \frac{10}{% \text{change in income}}

.

So, can you calculate the % change in income? Do you remember how to? New income - original income all over original income * 100, ring a bell?


Fix your dangerous latex. Also this isn't the maths forum :confused: you don't even go here
Reply 6
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Zacken
22
Original post by MasonM

And the income % change is worked out by taking £30,000 and dividing it by £25,000 which = 1.2 x 100 = +120%

so 10/120 x 100 = 8.33333

That should be your answer :smile:


No.
Reply 7
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MasonM
14
Original post by Zacken
No.


fixed maybe
Original post by Deen Meah
calculate the income elasticity of demand for food if an increase in income from £25,000 to £30,000 leads to an increase in the quantity demanded of food of 10%.
please show all working


% change in income / % change in demand

20%/10%

= 2
Original post by Josephine3233
% change in income / % change in demand

20%/10%

= 2


Actually the other way round:

10%/20%

= 0.5
Reply 10
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Zacken
22
Original post by tinkerbella~
Fix your dangerous latex. Also this isn't the maths forum :confused: you don't even go here


Sue me. :tongue: Is this your homeland? :yep:

Original post by MasonM

And the income % change is worked out by taking £30,000 and dividing it by £25,000 which = 1.2 x 100 = +120% or + 20%


You say you've fixed this, but your method still doesn't make sense. The percentage change between two quantities x0,x1x_0, x_1 where x0x_0 is the initial value is given by ∣x1−x0∣x0×100\displaystyle \frac{|x_1 - x_0|}{x_0} \times 100
Original post by Zacken
Sue me. :tongue: Is this your homeland? :yep:


We do simple maths here, you won't like it.
Reply 12
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Zacken
22
Original post by tinkerbella~
We do simple maths here, you won't like it.


Econ is full of lovely maths. :yep:
Original post by Zacken
Econ is full of lovely maths. :yep:


Too bad you couldn't even get an A* at GCSE. Too complicated for you clearly.
Reply 14
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Zacken
22
Original post by tinkerbella~
Too bad you couldn't even get an A* at GCSE. Too complicated for you clearly.


We're not all as clever as you, darling.
Original post by Zacken
We're not all as clever as you, darling.


You're the cleverest <3
Reply 16
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MasonM
14
Original post by Zacken
Sue me. :tongue: Is this your homeland? :yep:



You say you've fixed this, but your method still doesn't make sense. The percentage change between two quantities x0,x1x_0, x_1 where x0x_0 is the initial value is given by ∣x1−x0∣x0×100\displaystyle \frac{|x_1 - x_0|}{x_0} \times 100


You get the same answer and it does make sense do it on a calculator, wtf you talking about?

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