Oct/Nov 2010 p1 economics

[Jane Voon]

Can someone help me pls

7 The table shows a consumer’s expenditure on a range of goods at different levels of income.
For which good does the consumer have an income elasticity of demand greater than zero, but
less than one?
consumer’s income ($)
40 50 100
good consumer’s expenditure ($)
A 10 18 40
B 10 11 20
C 10 10 10
D 10 8 6

ans:B why so

 

[Mess]

Th

Can someone help me pls

7 The table shows a consumer’s expenditure on a range of goods at different levels of income.
For which good does the consumer have an income elasticity of demand greater than zero, but
less than one?
consumer’s income ($)
40 50 100
good consumer’s expenditure ($)
A 10 18 40
B 10 11 20
C 10 10 10
D 10 8 6

ans:B why so

This is very easy. YED is greater than zero but less than 1. This means that it is inelastic. In the table it shows that income is increasing from 40 to 50 to 100. When YED is inelastic this means that as income increases, expenditure increases but by LESS than the increase in income. Thus, answer is B.

 

[Jane Voon]

Th

This is very easy. YED is greater than zero but less than 1. This means that it is inelastic. In the table it shows that income is increasing from 40 to 50 to 100. When YED is inelastic this means that as income increases, expenditure increases but by LESS than the increase in income. Thus, answer is B.

Thank you