Answer:
1
Explanation:
Tonya consumes 40 steaks a year when her monthly income was $40,000
After her income drops to $35,000 she consumes 35 steaks
The first step is the calculate the percentage change in the quantity of steaks demanded
= 40-35/40 × 100
= 5/40 ×100
= 0.125 ×100
= 12.5
The percentage change in income can be calculated as follows
= $40,000-$35,000/$40,000 × 100
= $5,000/$40,000 × 100
= 0.125 × 100
= 12.5
Therefore the income elasticity of demand for steaks can be calculated as follows
= 0.125/0.125
= 1
Hence the income elasticity for the demand of steaks is 1
