Question

Sally recently got a 15 percent raise. she now purchases 7.5 percent more steak dinners. sally's income elasticity for steak dinners is

Answer 1

The question has it that Sally recently got a 15 % raise, and that she now purchases 7.5 % more steak dinners. To calculate Sally's income elasticity for steak dinners, we would divide the percent change in quantity demanded by the percent change in income.

7.5 / 15 = 0.5

Sally's income elasticity for steak dinners is 0.5