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JAMB Economics 1999 Question 6

Question 6

Elasticity

| Period 1 | Period 2
Family income | ₦1 000 | ₦1 500
Expenditure on clothing | ₦100 | ₦200
In the table above, the income elasticity of clothing is

  1. A.0.5
  2. B.2.0
  3. C.2.5
  4. D.5.0.
Show the answer and explanation

Answer: B (2.0)

Explanation

Spending on clothing rises from 100 to 200, a 100% rise; income rises from 1,000 to 1,500, a 50% rise. Income elasticity = 100 ÷ 50 = 2.0.