Question

If the income of a consumer decreases by 20% and the income elasticity of demand for gasoline is 2.5, what is the change in demand? A. increases by 50% B. decreases by 50% C. increases by 20% D. decreases by 20%

Name: if the income of a consumer decreases by 20 and the income elasticity of demand for gasoline is 25 what is the change in demand a increases by 50 b decreases by 50 c increases by 20 d decrea 49306
Uploaded: 2023-02-12T18:12:44-08:00
Duration: 3 min 56 s
Channel: James Kiss
Description: if the income of a consumer decreases by 20 and the income elasticity of demand for gasoline is 25 what is the change in demand a increases by 50 b decreases by 50 c increases by 20 d decrea 49306

          If the income of a consumer decreases by 20% and the income elasticity of demand for gasoline is 2.5, what is the change in demand?
A. increases by 50%
B. decreases by 50%
C. increases by 20%
D. decreases by 20%

Added by Rhonda G.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert James Kiss

02/12/2023

Step 1

Step 1: Calculate the percentage change in demand using the income elasticity of demand formula: Income Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Income) Show more…

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If the income of a consumer decreases by 20% and the income elasticity of demand for gasoline is 2.5, what is the change in demand? A. increases by 50% B. decreases by 50% C. increases by 20% D. decreases by 20%