Blake's income elasticity of demand for generic potato chips will be E = 1.09
The degree of demand's elasticity to changes in income is measured.
Elasticity of Income's formula is as follows:
Thus, we now have:
D_0 = 2
D_1 = 1
I_0 = 8
I_1 = 15
Elasticity (E) is now:
E = [(1-2)/(1+2)]/[(15-8)/(15+8)]
E = [1/3]/[7/23]
E = 1.09
The definition of income elasticity of demand states that it is the elasticity of demand brought on by changes in the consumers' income. The ratio of the percent change in the quantity demanded to the percent change in income is used to express it. It is described mathematically by the income elasticity of the demand formula.
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