Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are?

Question

Mathematics

Nancy Holloway

27 March, 01:28

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are?

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Aliyah Thomas · Answer 1

The uploaded question does not contain the options. The full question with the options is shown below.

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are

A) a normal good with a price elasticity of demand of 0.5.

B) a substitute good with a cross elasticity of 0.5.

C) a good with a price elasticity of supply of - 0.5.

D) an inferior good with an income elasticity of - 0.5.

E) an inferior good with an income elasticity of - 2.0.

Answer:

D) An inferior good with an income elasticity of - 0.5

Step-by-step explanation:

Income elasticity is calculated by finding the negative 50% change in demand.

Income elasticity = - 0.5

The reduction in demand for Ramen noodles due to the increase in income indicates that Ramen noodle is an inferior good that was only purchased because of Joe's meager income.