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Income Elasticity Exercise: When Jody's income increases by 10 percent and other things remain the same,...

Income Elasticity Exercise:

When Jody's income increases by 10 percent and other things remain the same, Jody decreases the quantity demanded of macaroni and cheese by 20 percent and increases the quantity demanded of chicken by 5 percent.

2a. Calculate the income elasticity of demand for macaroni and cheese.

2b. Is macaroni and cheese a normal good or an inferior good? Why?

2c. Calculate the income elasticity of demand for chicken.

2d. Is chicken a normal good or an inferior good? Why?

2e. Is the demand for chicken income elastic or income inelastic?

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