Suppose a consumer's income increases from \(\mathbf{y} 30.000\) to N36,000 As a result. the consumer increases her purchase of compact discs (CDS) from 25 CDS to 30 CDS. What is consumer's income elasticity of demand for CDS?
A. \(0.5\) B. \(1.0\) C. \(1.0\) D. \(1.5\)
Correct Answer: C
Explanation
\(e=\frac{\% \Delta \text { in } Q \mathrm{~d}}{\% \Delta \text { in price }}=\frac{Q_{2}-Q_{1}}{P_{2}-P_{1}}\) \(=\frac{6.000}{\frac{30.000}{s / 25}}=\frac{1}{\frac{5}{1 / 5}}=\)
