Question

suppose the income elasticity of demand for toys is +2.00. this means that a. a 10 percent increase in income will increase the purchase of toys by 20 percent b. a 10 percent increase in income will increase the purchase of toys by 2 percent c. a 10 percent increase in income will decrease the purchase of toys by 2 percent d. toys are an inferior good.

Answer 1

Income (I) elasticity is (%change Q)/(% change I).
So, you have (%change Q)/(10%) = 2.0 So, (%change Q) must be......