If, with an increase in income by 10%, the volume of demand for diamond jewelry increases by 15%
| March 15, 2021 | education
If, with an increase in income by 10%, the volume of demand for diamond jewelry increases by 15%, then the coefficient of the income elasticity of demand is equal to …
Elasticity is the sensitivity of one variable to a change in another variable. It is calculated simply: the ratio of the change in the amount of demand to the change in any factor of demand (in percentage).
That is, 15/10 = 1.5
Answer: coefficient of elasticity = 1.5
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