P4.6 Income Elasticity. Ironside Industries, Inc., is a leading manufacturer of tufted carpeting under the Ironside brand. Demand for Ironside's products is closely tied to the overall pace of building and remodeling activity and, therefore, is highly sensitive to changes in national income. The carpet manufacturing industry is highly competitive, so Ironside's demand is also very price-sensitive.

During the past year. Ironside sold 30 million square yards (units) of carpeting at an average wholesale price of $15.50 per unit. This year, household income is expected to surge from $55500 to

$58500 per year in a booming economic recovery.