A twelve percent increase in consumer income has caused the quantity of orange juice demanded to increase from 24,000 to 26,000. The income elasticity of demand for orange juice is:

Alright. Let's try this practice problem. A 12% increase in consumer income has caused the quantity of orange juice demanded to increase from 24,000 to 26,000. The income elasticity of demand for orange juice is so notice they already gave us an income increase of 12%, right. They've told us that we have a percent change in income of 12% and it's an increase so that one is going to be positive. Remember that our signs will matter, but for quantity demanded they gave us two numbers. We are going to have to find out, what the percentage change in quantity demanded was right. So income elasticity demand, our steps remain pretty much the same. Luckily for us, we only have to do quantity demanded in this one because they gave us the percentage change in income. So let's go ahead and get started. We've got 26,000 minuteus 24,000 and that equals 2,000. Step 2, we add them together. 26,000 +24,000 and that equals 50,000. Now let's divide that by 2. And step 3, 50,000 divided by 2 is gonna be 25,000. Alright. And now step 4, we are gonna do, 2,000 divided by 25,000. Yes. 22,000 divided by 25,000 which gives us, let's see, 0.08. There we go and that is gonna be our percentage change in quantity demanded, right? So we've got our percentage change in quantity demanded, our percentage change in income was given to us which was 12%, so that's 0.12, right? That was our percentage change in income given to us in the problem and now all we have to do is divide the 0.08 divided by the 0.12, and we're going to get, 0.666 6 forever so we'll put 0.667 or it looks like our answers are to 2 decimals so we'll go 0 point 67 right here. Last step is just to make sure that we're positive. I mean obviously it's gonna be D here because there's not a negative 0.67, but let's go ahead and just double check-in the problem. So it looks like demand increased from 24 to to 26 so that's gonna be positive, and income also increased by 12% it tells us, so that one's positive. We are gonna have a positive number. The answer is D. Alright, and just, to reiterate since we got an answer less than 1 but it's positive, we are going to have income inelastic demand here, right? Making it a necessity here. So it's a normal good necessity, income inelastic. Easy enough. 0.67 D, let's move on.

A twelve percent increase in consumer income has caused the quant...

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A twelve percent increase in consumer income has caused the quantity of orange juice demanded to increase from 24,000 to 26,000. The income elasticity of demand for orange juice is: