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tankabanditka [31]
3 years ago
14

Suppose that after hurricane​ Irene, the average income in Cape​ Charles, Virginia decreased by 2 percent. In response to th

is change in​ income, suppose the quantity of steak demanded in Cape Charles​ (holding the price of steak​ constant) decreased by 12 percent. What is the income elasticity of demand for steak in Cape​ Charles? The income elasticity of demand for steak in Cape Charles is _______. ​(Enter your response rounded to two decimal​ places.) In this​ instance, steak in Cape Charles is _______
Business
1 answer:
satela [25.4K]3 years ago
7 0

Answer:The income elasticity of demand for steak in Cape Charles is ___6.0%____. In this​ instance, steak in Cape Charles is __A luxury good_____

Explanation:

The formula for calculating income elasticity is given as

Percentage Change in demand divided by the Percentage change in income

.

Income Elasticity = 12%/-2%= 6%

Luxury goods  have an income elasticity of demand greater  +1 what we can conclude from this is that buying streak from Cape Charles is not an essential economic activity because a fall in income resulted to a proportionate decrease in quantity demanded.

In this instance, steak in Cape Charles is  a Luxury good _____

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Answer:

The answer is given below:

Explanation:

a.

1.Yes

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5.Yes

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b.

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12.No

As a rule of thumb,those costs which increase the value or useful life of asset should be capitalized where as those costs that are incurred to maintain the usage of asset are revenue expenditure and should be charged to income statement not the asset.

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