7 points total - Before I started my PhD program, I worked at an insurance firm and made relatively more money than right now. Because my income was high enough, I could afford to buy Mac make-up, my favorite brand. After I decided to go back to school, I started buying unbranded make-up. Hence, as my income dropped, my demand for unbranded make-up went up.

1. 3 points - What kind of good is unbranded make-up?
2. 4 points - Please write the formula for income elasticity andexplain in words what income elasticity is. You can use the other elasticities formulas I showed you in class for reference.