A DJ wants to analyze market reactions to the new music selections played at his dance last weekend. He advertises his weekly da
1 answer:
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Answer:
The correct answer is option E.
Explanation:
Income elasticity of demand measures the change in quantity demanded of a product because of a change in the income of the consumer. It is calculated as a ratio of change in quantity demanded and change in income.
At the income level of $300, the consumers buy 5 bars of chocolate. When the income increases to $330, the consumer buys 6 bars of chocolate.
The income elasticity of demand is
=
=
=
=
= 2
Since the income elasticity of demand is positive, this implies that chocolate is a normal good.