Congratulations! You have just landed your first job out of college as an economic analyst at the Bureau of Labor Statistics.Your starting salary is $55,000 per year; an increase of 250% per year over the salary you made at the local coffee shop. Thecorresponding table gives the percentage change in your purchases of each good after your income increases. Use thisinformation to estimate your income elasticity of demand for each of the items.Meals at restaurantsCups of coffeeInstant noodlesa. Income elasticity for meals at restaurants isb. Income elasticity for cups of coffee isc. Income elasticity for instant noodles isPercentage change in quantity50080-75d. Based on the calculations of income elasticity, meals at restaurants areand ramen noodles arecoffee is

Income elasticity of demand measures the responsiveness of the demand for a good or service to the…

Answered: a. Income elasticity for meals at…

a. Income elasticity for meals at restaurants is b. Income elasticity for cups of coffee is c. Income elasticity for instant noodles is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Congratulations! You have just landed your first job out of college as an economic analyst at the Bureau of Labor Statistics.
Your starting salary is $55,000 per year; an increase of 250% per year over the salary you made at the local coffee shop. The
corresponding table gives the percentage change in your purchases of each good after your income increases. Use this
information to estimate your income elasticity of demand for each of the items.
Meals at restaurants
Cups of coffee
Instant noodles
a. Income elasticity for meals at restaurants is
b. Income elasticity for cups of coffee is
c. Income elasticity for instant noodles is
Percentage change in quantity
500
80
-75
d. Based on the calculations of income elasticity, meals at restaurants are
and ramen noodles are
coffee is

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