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    An individual with a monthly income of £2000 regularly visits the cinema four times a month. His monthly income then falls to £1000 and he reduces the number of visits to the cinema to three times per month. The best estimate for income elasticity of demand is...
    A) 0.5
    B)-0.33
    C)2.0
    D)-0.5
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    (Original post by hbos14)
    An individual with a monthly income of £2000 regularly visits the cinema four times a month. His monthly income then falls to £1000 and he reduces the number of visits to the cinema to three times per month. The best estimate for income elasticity of demand is...
    A) 0.5
    B)-0.33
    C)2.0
    D)-0.5
    YED= (change in QD/change in Y)* ( original Y/Original QD)
    =(3-4/1000-2000)*(2000/4)=0.5

    NOTE: Calculate change->new-old
 
 
 
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