Question

The income elasticity of restaurant meals is 0.6. If customers income becomes 300,000 LBP instead of 200,000 LBP , the quantity demanded will

Answer 1

$E$^d_I$=\frac{\Delta Q\%}{\Delta I\%};$

$\Delta I\%=\frac {300000}{200000}×100\%-100\%=50\%;$

$0.6=\frac {\Delta Q}{50\%};$

$\Delta Q=0.6×50\%=30\%;$

Answer: the quantity demanded  will be increased by 30%.