If Income Increases from $50,000 to $60,000 While the Demand

question 40

Essay

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

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Definitions:

Marginal Provincial Tax Rate

The rate at which your next dollar of taxable income would be taxed, specific to the province in the context of Canadian taxation.

Provincial Tax Rates

The percentage rate at which income, goods, services, and transactions are taxed by individual provinces or territories in Canada.

Net Capital Spending

Net Capital Spending is the total amount spent on acquiring or maintaining fixed assets minus any sales of fixed assets during a given period.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset over time.