Part 1When income increases by 55 percent and all prices remain the same, the quantity of smartphones demanded increases by 1010 percent. Calculate the income elasticity of demand of smartphones. Part 1The income elasticity of demand of smartphones is [input]enter your response here . If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.

Question

Part 1When income increases by 55 percent and all prices remain the​ same, the quantity of smartphones demanded increases by 1010 percent. Calculate the income elasticity of demand of smartphones. Part 1The income elasticity of demand of smartphones is [input]enter your response here .  ​>>> If your answer is​ negative, include a minus sign. If your answer is​ positive, do not include a plus sign.

BlackTom AI · Accepted Answer

We are asked to compute the income elasticity of demand for smartphones given the percentage change in quantity demanded and the percentage change in income.
First, recall the formula for income elasticity of demand (Ey) = Percentage change in quantity demanded / Percentage change in income.
From the problem, the income increases by 55 percent, so %ΔI = 55%. The quantity demanded increases by 1010 percent, so %ΔQ = 1010%.
Next, perform the division: Ey = 1010 / 55.
Calculating 1010 divided by 55 yields approximately 18.3636..., which rounds to 18.36 when expressed to two decimal places.
Interpretation-wise, a very large positive elasticity indicates that demand for smartphones is highly responsive to income changes in this scenario.
Note: Since the problem asks to input a numeric value without a leading plus sign for positive elasticity, the final value should be written as 18.36.

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