Use this example from a fixed-rate mortgage calculator to help you answer the questions. Keep the page open after you complete t
2 answers:
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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.