Answer to Question #56116 in Microeconomics for mayank bajaj

Question

a) Suppose the monthly income of an individual increases from Rs 20,000 to Rs 25,000

which increases his demand for clothes from 40 units to 60 units. Calculate the income

elasticity of demand.

b) Quantity demanded for tea has increased from 300 to 400 units with an increase in the

price of the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand

between tea and coffee.