Blake eats two bags of generic potato chips each day, and does not purchase any name-brand chips. Blake's hourly wage increases from $ 8 to $ 15, and he decides to eat one name-brand bag and one generic-brand bag each day. Calculate Blake's income elasticity of demand for generic potato chips. Vacations are a (n) normal good. As a good, vacations are income-elastic. Generic potato chips are a (n) inferior good. As a good, generic potato chips are neither income-elastic nor income-inelastic.

-1.10; Generic potato chips are a (n) inferior good.

Explanation:

Initial income = $8

New income = $15

Initial demand = 2

New demand = 1

Average income:

= (Initial income + New income) : 2

= ($8 + $15) : 2

= $11.5

Change in income:

= (New income - Initial income) : Average income

= ($15 - $8) : $11.5

= 0.61

Average quantity demanded:

= (Initial demand + New demand) : 2

= (2 + 1) : 2

= 1.5

Change in Quantity demanded:

= (New demand - Initial demand) : Average Quantity demanded

= (1 - 2) : 1.5

= - 0.67

Blake's income elasticity of demand for generic potato chips:

= Change in Quantity demanded : Change in income

= - 0.67 : 0.61

= - 1.10

Therefore, the demand for generic potato chips is negative income elastic.

Hence, the Generic potato chips are an inferior good.