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Discussion of Income Elasticity of Demand

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When average consumer income increases from $40,000 to $44,000 in Mapleville, the quantity demanded of widgets went from 10 to 9 units per capita, even though the price of widgets and other products did not change.

What is the income elasticity of demand for widgets (using the midpoint method).

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The expert provides a discussion of income elasticity of demand.

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The formula for the Income Elasticity of Demand (PEoD) is: PEoD = (% Change in Quantity ...

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