Terps Company reports the following amounts: Book Value Fair Value Assets $ 400,000 $ 500,000 Liabilities 45,000 45,000 Net inco
1 answer:
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Answer:
16.67
normal
Explanation:
Income Elasticity of Demand =
% change in movie downloads = (4 - 2) / 2
% change in movie downloads = 2 / 2
% change in movie downloads = 1
or
% Change in quantity demanded = 100%
% change in income = ($82,000 - $77,000) / $77,000
% change in income = $5,000 / $77,000
% change in income = 0.06
or
% change in income = 6%
Income Elasticity of Demand = 100% / 6%
Income Elasticity of Demand = 16.67
When the Income Elasticity of Demand is positive, it is usually Normal Goods. As Income goes up, similarly the movie downloads or quantity demanded going up. So, this is a normal good.