Question 2
(a) What is income elasticity of demand? The table below shows the various incomes and demand for different commodities.
| Income (N) | Quantity Demanded (kg) |
| A 20,000 | 120 |
| B 36,000 | 96 |
| C 40,000 | 160 |
| D 44,000 | 200 |
| E 45,000 | 240 |
| F 47,000 | 252 |
(b) Calculate the income elasticity between
(i) A and B
(ii) C and D
(iii) E and F
(c) What kind of good is between
(i) A and B?
(ii) C and D?
Theory