Question

If the income elasticity for computers is 1.2, and incomes increase by 10%, the demand for computers, using one decimal place and the negative sign if necessary, will increase by _____%.

Answer 1

Answer:

The answer is "12.0%".

Explanation:

Economically, price elasticity makes a clear distinction between a consumer's production and a consumer's earnings.  

• In this question, income elasticity is given that is "1.2", and incomes increase percentage is given, that is 10%.

• The total income elasticity is in percentage is $1.2 \times 10 \% \ = 12.0\ \%$.