AQA, Aquinas, Economics, ECON1, Markets, Market Failure

1. ECON1
WWW.AQUINASECONOMICSAS.CO.UK
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Income Elasticity of Demand
Answer all the questions below
1. Explain the term Income Elasticity
2. What is the calculation for Income Elasticity of Demand
3. Explain the concepts of Normal and Inferior Goods and how they would
relate to Income Elasticity
4. Calculate the following:
a. Incomes rise by 10% but demand falls 15%
b. Incomes rise by 4.5% and demand rises 12.6%
c. Incomes fall by 6.9% and demand falls by 2.4%
d. Incomes fall by 19.6% but demand rises 45%