7. Using the income elasticity of demand to characterize goods

Data collected from the economyr of Pokerville reveals that a 16% increase in income leads to the following changes: . A 6% increase in the quantity ofops demanded . A 14% decrease in the quantity of clubs demanded . A 29% increase in the quantity of aces demanded Compute the income elasticity of demand for each good and use the dropo'own menus to compiete the rst column in the foiiowing tabie. Then, based on its income eiasticity, indicate whether each good is a normai good or an inferior good. (Hint: Be carefui to keep track of the direction of change. The sign of the income eiasticit],r of demand can be positive or negative, and the sign confers important infomation.) Good Income Elasticity of Demand Normal or Inferior Goo-d Flops V V Clubs v _' ACEE V V