1. Sally's income two years ago was $40,000 and she spent an annual total of $600 on food in restaurants (quantity of food is measured in dollars in this problem). Last year her income was $44,000 and her restaurant spending had an annual total of $700.

a. What is her income elasticity of demand for restaurant food assuming the price per unit of restaurant food is the same two years ago and last year? (Please provide a numerical answer)

b. Between last year and this year Sally's income fell from $44,000 to $42,000. Based on your answer in Part a and with the same assumption about the price per unit of food remaining constant from last year to this year, what do you predict Sally will spend annually on restaurant food this year under the assumption that her income elasticity of demand also remained constant? (Again, I expect a numerical answer here)