Economists at Econ Phones Company want to find the relationship between consumer income and demand for Econ Phones. Data shows that when a 500 dollar federal fiscal stimulus was sent to consumers, average consumer income increased 3 percent. Data also shows sales decreased from 100 million to 80 million.

Question 5What is the income elasticity of demand based on the data given? (5 points)

Question 6What does the sign of the coefficient (positive or negative) suggest (type of product relevant to income elasticity)? (2 points)

Question 7Based on the findings, if there is a report that a second fiscal stimulus is being sent to customers, how should Econ Phones prepare (should it make more for fewer phones)? (3 Points)