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JAMB Economics 2008 Question 9

Question 9

Elasticity

If income rises from ₦2 000 to ₦4 000 and quantity demanded increases from 80 units to 120 units, find the income elasticity of demand.

  1. A.0.5
  2. B.1.2
  3. C.2.5
  4. D.4.0
Show the answer and explanation

Answer: A (0.5)

Explanation

% change in quantity = 40/80 = 50%; % change in income = 2 000/2 000 = 100%; income elasticity = 50 ÷ 100 = 0.5.