Answer:
d) 1.22, and basketball tickets are a normal good
Explanation:
Given that
Q1 = 20
Q2 = 25
P1 = 50000
P2 = 60000
Income elasticity = (Q2 - Q1)/(Q2 + Q1) ÷ (P2 - P1)/(P2 + P1)
therefore,
IE = (25 - 20)/(25 + 20) ÷ (60000 - 50000)/(50000 + 60000)
= (5/45) ÷ (10000/110000)
= 0.11111 ÷ 0.09090
= 1.22.
Normal goods are those goods that demand increases with increases in income. Therefore, in this case basketball is a normal good as there was an increase in demand with increase in income. Also normal goods has positive income elasticity, given that 1.22 is positive, it also indicates that it is a normal good.
Answer:
d) 1.22, and basketball tickets are a normal good
Explanation:
Income elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Elasticity of demand = percentage change in quantity demanded/ percentage change in income
Percentage change in income = (60,000 - 50,000) / 50,000 = 0.5
Percentage in quantity demanded = (25-20)/20=0.25
0.25/0.5 = 1.25
A normal good is a good whose demand increases when income increases and falls when income falls.
It varies directly with income.
An inferior good is a good whose demand increases when income when income falls and falls when income rises.
Because the demand for tickets increases with income, the tickets are a normal good.
I hope my answer helps you
