question archive Mary buys 27 tuna sandwiches when her income is $36
Mary buys 27 tuna sandwiches when her income is $36
Subject:EconomicsPrice:2.88 Bought3
Mary buys 27 tuna sandwiches when her income is $36. Her income rises to $48 and now she buys 13 tuna sandwiches. What is Mary's income elasticity of demand?
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The percentage change in income is:
- (48 - 36) / 36 = 0.33
The percentage change in consumption of Tuna is:
- (13 - 27) / 27 = -0.52
The income elasticity is the percentage change in consumption divided by the percentage change in income, i.e.,
- (-0.52) / (0.33) = -1.57
