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Marco's income falls from $400 per week to $300per week as a result of reduced hours.His purchases of tuna increases from 4 tins per month
Marco's income falls from $400 per week to $300per week as a result of reduced hours.His purchases of tuna increases from 4 tins per month to 8tins per month.
Rajendra'sincome rises from $350 per week to $500 per week. In response, her demand for tuna increases from 5 tins per month to 10 tins per month.
(a) Calculate the Income Elasticity (Ey) for each person.
(b) What does income elasticity tell economists? Explain.
(c) How does Marco's attitude toward tuna differ from Rajendra's? Please explain using your calculations above.
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