What is the income elasticity of demand

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Reference no: EM131088840

Assume that VCRs continue to be sold at $200 per unit while average income increases from $30 thousand to $50 thousand. Assume also that the price for DVD players remains steady at $500. Using the midpoint method, what is the income elasticity of demand?

Demand for VCR's

Price $300

Quantity 167,000

Demand Shifters

Average Income 30,000

Price of DVD players $500

Demand for VCR's

Price $200

Quantity 492,000

Demand Shifters

Average Income 50,000

Price of DVD players $500

Reference no: EM131088840

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