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gogolik [260]
3 years ago
14

Suppose that demand for automobiles increases by 30% when consumers’ incomes increase by 25%. What is the income elasticity of d

emand for automobiles? round your answer to two decimal places.
SAT
1 answer:
Nina [5.8K]3 years ago
4 0

When the above situation occurs, we can say that the income elasticity of demand for automobiles is<u> 1.2.</u>

<u />

<h3>What is the income elasticity of the automobiles?</h3>

This can be found by the formula:

= Change in quantity demanded of automobiles / Change in income

Solving gives:

= 30% / 25%

= 1.2

In conclusion, the income elasticity here would be 1.2.

Find out more on income elasticity of demand at brainly.com/question/3980051.

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