Answer to Question #220808 in Economics for shatadi

Question

If Shelly’s income increases by 10% and at the same time there is a 2% decrease in her quantity demanded of potatoes, the income elasticity is

Answer 1

Income elasticity of demand is an economic measure of how responsive the quantity demand for a good or service is to a change in income.

The formula for calculating income elasticity of demand is the percent change in quantity demanded divided by the percent change in income.

Е = -2/10 = -0.2