Gabriela recently got a 10 percent raise. She now purchases 30 percent more in groceries on a weekly basis. Gabriela's income elasticity for groceries is

A) 0.33.
B) 0.5.
C) 1.
D) 3.

Question

Gabriela recently got a 10 percent raise. She now purchases 30 percent more in groceries on a weekly basis. Gabriela's income elasticity for groceries isA)  0.33.B)  0.5.C)  1.D)  3.

press genius · Accepted Answer

Final Answer : D, Explanation :  Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it's 30% / 10% = 3.

Gabriela recently got a 10 percent raise. She now purchases 30 percent more in groceries on a weekly basis. Gabriela's income elasticity for groceries is

A) 0.33.
B) 0.5.
C) 1.
D) 3.

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