If there has been a 10 percent increase in consumer income between two periods, what was the percentage change in the demand for foreign travel? For tobacco products? For Flour?
Commodity Income Elasticity
European Cars 1.93
Asian Cars 1.65
The change in demand is related to price elasticity and change in income by the following formula:
where D=percent change in demand, I=percent change in income, and E=price ...
This solution examines the elasticity of income for commodities.