Adella always spends 30 % of her income on soft-shell crabs. Assume that her income increases by some percentage while the price of soft-shell crabs remains constant (and that all soft-shell crabs cost the same). What is her income elasticity of demand for soft-shell crabs?

Question

Physics

Jaycee Trevino

21 May, 23:05

Adella always spends 30 % of her income on soft-shell crabs. Assume that her income increases by some percentage while the price of soft-shell crabs remains constant (and that all soft-shell crabs cost the same). What is her income elasticity of demand for soft-shell crabs?

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Answers (1)

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Nicholas Bright · Answer 1

This means the income elasticity of demand is 1, unit elastic.

Explanation:

Ir respect of any change in income, the proportion of income spent on soft-shell crabs remains the same. This means the income elasticity of demand is 1, unit elastic. In other words the %change in quantity demanded is same as %change in income.