Question

A weekly income of a clerk was Increased from $100 to $125 as a result of promotion in the office. He is to purchase 300 loaves of bread instead of 200 per week. Calculate the coefficient of his income elasticity of demand.

Answer 1

$$E=\frac{Q_2-Q_1}{Q_2+Q_1}:\frac{I_2-I_1}{I_2+I_1}=2.25$$