Question

Timmy's income is $500 per week. At a price of $1 per mango, Timmy buys 4 mangoes. Timmy's income increases to $560 per week and Timmy's consumption of mangoes increases to 6. What is Timmy's income elasticity of demand for mangoes?

Answer 1

Answer:

income elasticity of demand for mangoes =  3.53

Explanation:

given data

income is $500 per week

mango price = $1  

buys =  4 mangoes

income increases = $560 per week

mangoes increases =  6

solution

we get here income elasticity of demand for mangoes that is express as

income elasticity of demand for mangoes = $\frac{\frac{6-4}{(6+4)/2} }{\frac{560-500}{(560+500)/2} }$        

income elasticity of demand for mangoes =  3.53