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Suppose a 4 Percent Increase in Income Results in a 2

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Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.


Definitions:

Gas-guzzler Automobiles

Describes vehicles that are inefficient in their fuel consumption, typically with lower miles per gallon.

Japanese Fuel-efficient Cars

Automobiles produced by Japanese manufacturers known for their high fuel efficiency and innovative engineering.

Consumer

A person or collective that buys products and services for private consumption.

Seller

An individual or entity that offers goods or services in exchange for financial compensation.

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