Arc Income Elasticity

question 19

Essay

Arc Income Elasticity. Glenco Motors sells an average of 20 Toyota Camry XLE four-door sedans per month. Evanston Toyota sells twice as many. Based upon data obtained in the financing process, Glenco customers earn an average household income of $100,000 per year, while Evanston customers earn $125,000 per year.
A. Calculate the implied arc income elasticity of demand.
B. How would you characterize demand for these Toyota Camrys?

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