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Elasticity of Income for Commodities

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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
Flour -0.36
Cigarettes 0.50
European Cars 1.93
Asian Cars 1.65

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Solution Summary

This solution examines the elasticity of income for commodities.

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The change in demand is related to price elasticity and change in income by the following formula:

D/I=E

where D=percent change in demand, I=percent change in income, and E=price ...

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