microeconimcs -elasticity?

Question

state the relevant elasticity concept. Then compute the measure of elasticity. Where appropriate, use the average prices and quantities in your calculations. In all cases, assume that these are ceteris paribus changes.(20)

--.As average household income in Canada increases by 10 percent, annual sales of a Bentley 56000 to 67000

Answer 1

This one is the income elasticity of demand. Here is how it is computed: %change in quantity demanded/ % change in income.

So, your elasticity would be calculated like this:

(67000-56000)/56000= % change in demand=19.6%

19.6%/10%=1.96

1.96 is the income elasticity of Bentleys.