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12 September, 01:26

When income is?$400400 per? week, 33 nights dining outnights dining out are demanded. when income is?$600600 per? week, 55 nights dining outnights dining out are demanded. the income elasticity of demand for nights dining outnights dining out? equals:?

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  1. 12 September, 03:26
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    In economics, income elasticity of demand measures the response of the number demanded for a good or service to a change in the income of the people demanding the good or service. The formula for calculating this metric is:

    Income Elasticity Demand = Change in Quantity Demanded / Change in Income

    Income Elasticity Demand = 55 nights - 33 nights / $600 - $400

    Income Elasticity Demand = 0.11 = 11%

    Since Income Elasticity Demand is 0.11 or 11% (positive number), therefore this means that an increase in income of the people leads to an increase in the demand of nights dining out.
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