# data[].attributes.body
a)      Quantity demanded: 4-2/2 x 100% = 100

Income: 7000-6000/6000 x 100 = 16.667

100/16.667 = 6

b)     Sandy’s IED is 6, which is more than 1, thus it is a luxury good.

c)      Quantity Demanded: 13-15/15 x 100 = -13.333

Income: 7000-6000/6000 x 100 = 16.666

IED: -13.333/16.666 = -0.8 (Inferior good)

d)     She has more income now, so she can dine more frequently at restaurants as she wants higher quality food. She can afford dining at restaurants, as luxury goods as compared to dining at hawker centres which are inferior goods.

e)      The owner of a fine-dining restaurant. Due to the increase in the salary, everyone will be looking for luxurious goods, as they have more to spend now. They will definitely choose to dine at a restaurant, which is a luxury good, than eat at a hawker centre, which is an inferior good.

f)       Quantity Demanded: 22-20/20 x 100 = 10
Income: 7000-6000/6000 x 100 = 16.666
10 / 16.666 = 0.6
The IED is 0.6, which is more than 0 and lesser than 1. This makes it an essential good.

g)      There is an increase in income and the quantity demanded. Both 0.6 and 6 are positive and this shows that it is a normal good.

# data[].attributes.body
derrick
a. Restaurants (quantity demanded): [(4-2)/2] x 100 = 100

Income: [(7000-6000)/6000] x 100 = 50/3

100/ (50/3) = 6

b. +ve 6, and income elasticity is MORE THAN 1.  Hence, it is a normal goods (luxury)  therefore, When income increase by 16 %  the quantity demand for restaurants increase more than proportionately. Hence, the demand for restaurant is income elastic

c. . Hawker meal (quantity demanded): [(13-15)/15] x 100 = -2/15

Income: [(7000-6000)/6000] x 100 = 50/3

-0.8 (inferior goods)

d.She has more income now, so she dine more frequently at restaurants as she wants better quality food. When income increases. So she will dine more at restaurant because income is +ve. Dine less at hawker because income elasticity is –ve.

e. The owner of a fine-dining restaurant. That is because Singaporeans experience an increase in salary. Hence, there would be a preference for normal goods than inferior goods. People will spend more in restaurants than hawker as they want better quality food. f. Onions (quantity demanded): [(22-20)/20] x 100 = 10Income: [(7000-6000)/6000] x 100 = 50/310 / (50/3) = 0.6 (normal essential goods)It is +ve, so it is an normal good. It is less than 1, so it is an essential good. g. Income increase, quantity demanded increase (only tells us it is +ve, it is a normal good). Quantity demanded for restaurant is proportionately more compared to the income change.Quantity demanded for hawker is proportionately less compared to the income change.

# data[].attributes.body
a. %change in income:  7000-6000=1000

1000/6000x100% = 16.67%

% change in qty: 4-2/2x100= 100%

Change in elasticity: 100/16.67=6

b.The income elasticity is positive and it is a luxury goods since the value is 6

c. %change in income:  7000-6000=1000

1000/6000x100% = 16.67%

% change in qty: 13-15/15x100= 13.33%

Change in elasticity: 13.333/16.666= -0.8

d. When there is increase in income the demand for such goods will increase hence Sandy tend to go for better place to dine that are more expensive.

e. The owner of fine-dining restaurant because the increase will be more than proportionate compared to hawker centre.

f. %change in income:  7000-6000=1000

1000/6000x100% = 16.666%

% change in qty: 22-20/20x100=10%

Change in elasticity: 10/16.67= 0.6

Onion is an essential good this is because when income increase, the quantity demand decrease by less than proportionate

g. There is increase in income and increase in quantity demand. The onion is a an essential goods and restaurant is luxury.

# data[].attributes.body
a)Percentage Change in quantity = ((4-2)/2) X 100 = 100%

Percentage change in income = (7000 – 6000)/6000 = 1.67

100/1.67 = 5.99 = 6

# data[].attributes.body
a)       % change in demand for restaurant dining = ([4-2]/2 X 100%) = 100%

% change in income = ([7,000 – 6,000]/6,000 X 100% ) = 16.66%

Income elasticity of demand = 100%/ 16.66% = 6.00 (2dp)

b) Since the income elasticity demand > 1 , the demand for restaurant dining is income elastic and is a normal luxury good.
(when income increase by 16.6%, quantity demanded for restaurant dining increase by more than proportionate (100%). The value of Sandy’s income elasticity of demand (6) is positive and greater than 1. Therefore, this suggest that as her income increases, her demand for restaurant is income elastic. )

c) % change in quantity demand for hawker meals = ([13-15]/15 X 100%) = -13.33% (2dp)

% change in income = ([7,000 – 6,000]/6,000 X 100% ) = 16.66%

Income elasticity of demand = -13.33%/16.66% = -0.80 (2dp)

Since the income elasticity is less than 1, dining at hawker centres is income inelastic and is an inferior good.

d. Since she has an increase in income, she is able to afford more luxury goods thus her demand for restaurant dining will increase.

e. The owner of the fine-dining restaurant as they will experience a greater demand when incomes of their customers increase. On the other hand, hawker centre stall will experience a drop in demand as people will opt for fine-dining restaurants.

f. Percentage change for quantity demand in onion = ([22-20]/20) X100 % = 10%

% change in income = ([7,000 – 6,000]/6,000 X 100% ) = 16.66%

Income elasticity for demand of onion = 10%/ 16.66% = 0.60 (2dp)

Since the income elasticity for demand of onion is less than 1 but more than 0, onions are income inelastic and considered normal essential goods. Therefore, when there is an increase in income, there will be a less than proportionate percentage change in demand for onion than the percentage change in income.

g. Income elasticity for onions is income inelastic while restaurant dinner is income elastic. Although both goods experience an increased in demand when income of Sandy increased, the proportion of the increase of quantity for restaurant dinning is more than the proportion for the increase in quantity for onions making restaurant dinning more income elastic.

# data[].attributes.body
a)Percentage Change in quantity = ((4-2)/2) X 100 = 100%

Percentage change in income = (7000 – 6000)/6000 = 1.67

100/1.67 = 5.99 = 6(Bobby)

# data[].attributes.body
Activity 1
Ai)(4-2)/2=1

1 x 100%=100%

(7,000-6,000)/6000=0.167

0.167 x100% =16.67

Income elasticity of demand = 100/16.67 =5.9998 ~6.00

b).When income increase(16.67%), quantity demanded for restaurant meal increase by more than proportionate(100%).  The value of Sandy’s income elasticity of demand (6) is positive and greater than 1. Therefore, this suggest that as her income increases, her demand for restaurant is income elastic.

c)(13-15)/15 =-0.133
0.133 x100% =-13.33%

Income elasticity of demand =-13.33/16,67 =-0.79

The value of income elasticity of demand is less than 0 and it is negative. Thus, it is an inferior good. There is decrease in quantity demanded when there is an increase in income.

d)An increase in income allows sandy to afford better food which hawker centres consider to have inferior food and restaurants having normal goods.

e)Increase in demand for fine-dining restaurant and a slight decrease in demand for hawker centre as people will increase number of times going to fine-dining restaurant to get normal food instead of inferior food.

f) (22-20)/20 =0.1

0.1 x 100% =10%

Income elasticity of demand = 10/16.6667 =0.599

Onion is a considered essential goods to sandy

g) Onions is inelastic, and restaurant is elastic . This is because onions is considered normal essential goods which people will not buy too much of it whereas eating in fine-dinning restaurant is a normal luxury goods which will have a bigger change in demand

Both are normal goods, onion is smaller than 1 so it is essential while restaurant is greater than 1 hence it is luxury.

The restaurant will have a larger change in quantity as compared to onions as it is more elastic as compared to onion.

R: Quantity change proportionately more than change in income.

O: Quantity change proportionately less than change in income

# data[].attributes.body
Q1a. % change in quantity demanded = (4-2)/2 * 100%= 100%

% change in income = (7000 - 6000)/6000 * 100% = 16.667%

Therefore, income elasticity of demand = 100/16.66666667= 6 (5.9998)

Q1b. Given Sandy’s income elasticity of restaurant dinners is positive, restaurant dinners are normal goods to Sandy. Also, since the value is 6, which is greater than 1, it shows it is a luxury good.

Q1c. % change in quantity demanded = (13-15)/15*100 = - 13.333%

% change in income = (7000-6000)/6000 * 100 = 16.667%

income elasticity of demand = - 13.333/16.667 = -0.799964 (-0.8), thus it is an inferior good.

Q1d. Sandy is richer now and she can choose to consume more expensive food, luxury goods.

Q1e. there will be an increase in both the owner of the fine dining restaurant and the hawker centre will enjoy an increase in revenue due to an increase in sales and revenue because it depends on the preferences of the customer.

Q1f. % change in quantity demanded for onions = (22-20) / 20 * 100% = 10%

% change in income = (7000 - 6000) / 6000 * 100 = 16.667%

Income elasticity  = 10% / 16.667% = 0.5999 (0.6)

Since the income elasticity of 0.6 is positive and less than 1, Onions are normal essential (necessity) goods for Sandy.

# data[].attributes.body
Percentage change in quantity demanded = 4 -2 / 2 X 100 =100%

Percentage change in income = 7000/6000/6000 X100 = 16.7%

IE = 5.99 = 6

b) As the IE is positive this mean that the quantity demanded will increase when there is an increase in income. As restaurant is consider a normal luxury goods in this case as the IE is more than 1, this mean that when there is an increase in income there will be an increase in revenue sales.

c) Percentage change in quantity demand = 13 -15 /15 X 100 = -13.33

Percentage change in income= 7000/6000/6000 X100 = 16.7%

IE= - 0.80 (inferior good)

e) The owner of a fine-dining restaurant as it considers a luxury goods. Thus, when there is an increase in Singaporeans salary, they would tend to go for luxury goods more. Therefore, there will be an increase in revenue for fine-dining restaurant.

f) % change in quantity demand for onion = 22 – 20 /20 X100 = 10%

% change in income= 7000/6000/6000 X100 = 16.7%

IE = 0.60

As the IE is positive it is considering a normal goods and as the IE is less than 1 this means that it is a normal essential goods.

g) when there is a change in income it will lead to a less than proportionate change in quantity demanded as onion is consider a normal essential goods so when there is an increase in income there will not be an significant increase in sales and revenue. While for restaurant when there is a change in income It will lead to more than proportionate change in quantity demanded because it is a luxury goods thus when there is an increase in income there will be an increase in sales and revenue.

(Liyi)

# data[].attributes.body
Activity 1

a.% change in quantity demanded = [(4-2)/2] x 100%
= 100%

% change in income = [($7,000 - $6,000)/$6,000] x 100% =16.67% (2 d.p)

Income Elasticity = % change in quantity demanded / % change in income = 100 / 16.67
= 6

b) Given her income elastic of 6 which her IE is greater than 1, this shows that dining at the restaurant is a luxury normal goods for Sandy.

c) % changed in quantity demanded = [(13-15)/15] x 100% = -13.33% (2 d.p)

% change in income = [($7,000 - $6,000)/$6,000] x 100% = 16.67%

Income Elasticity = % change in quantity demanded / % change in income = -13.33 / 16.67

= 0.80 (2 d.p)
d. Sandy dines more frequently at restaurants as it is considered ‘luxury’ hence, increase in income will cause her to want to dine in restaurant more. However, hawker centres is considered ‘inferior’ hence, increase in income will cause her to less frequent to hawker centres

e. The owner of a fine-dining restaurant will enjoy an increase in revenue as more people are willing to spend their money on ‘luxury goods’.

f. % change in quantity demanded = [(22-20)/20] x 100%

= 10%

% change in income = [($7,000 - $6,000)/$6,000] x 100%

= 16.67% (2 d.p)

Income Elastic = % change in quantity demanded / % change in income = 10 / 16.67
= 0.60 (2 d.p)

As the IE is less than 1, this shows it is a inferior goods.

g. Both are positive therefore they are normal goods. However, for onions income elasticity is less than 1 therefore, it is a normal essential goods while for restaurant dinner income elasticity is more than 1 therefore, it is a luxury normal goods.

Change in price of onions will lead to less than proportionate change in quantity demanded while change in price of restaurant dinners will lead to more than proportionate change in quantity demanded.

# data[].attributes.body
a)4-2 / 2 * 100 = 100%

$7000 - $6000 / 6000 * 100 = 16.67%

Ie = 100% / 16.67% = 6%

b) The income elasticity is positive, the restaurant dining is would be normal luxury good as the value is more than 1.

c) 13 - 15 / 15 =-13.33%

-13.33% / 16.67% = -0.8%

The hawker center would be the inferior goods as the value is -0.8%

d. It is because as her income increases, she can afford the restaurants more now.

e.  The owner of fine-dining restaurant will enjoy an increase in revenue. This is because when Singaporeans experience a salary increase and their value of income elasticity would most likely be more than 1, they can afford to go to luxury goods with high income elasticity.

f. 22 – 20 / 22 * 100 = 9.09%

Ie = 9.09 / 16.67 = 0.6%

As the Ie value is between 0 to 1, the onion would be the normal essential goods.

g. Even though the increase in both products is 2, the percentage increase between the restaurant (100%) and onion (9.09%) is different. As the demand price for restaurant is elastic, the change of income for Sandy would lead to a more proportionate change in quantity.

# data[].attributes.body
a) % change in quantity demanded = (4-2)/2 * 100%= 100%% change in income = (7000 - 6000)/6000 * 100% = 16.667%Income elasticity of demand = 100/16.66666667= 5.9998 = 6 (round up) The value is positive as it is more than 1. Therefore, it is a normal luxury good therefore change in quantity demanded will be more proportionate to than increase in income.

b) Since the value of Sandy’s income elasticity of demand is 6, which is greater than 1. This shows that restaurant dinners are normal luxury goods to Sandy as it is positive. The change in quantity demanded will be more proportionate to than increase in income.

c) % change in quantity demanded = (13-15)/15*100 = - 13.333% [negative change] % change in income = (7000-6000)/6000 * 100 = 16.667%Income elasticity of demand = - 13.333/16.667 = -0.799964 = -0.80 (round up)  The value of income elasticity of demand is less than 0 and it is negative. Thus, it is an inferior good. There is decrease in quantity demanded when there is an increase in income.

d) Her income increases, and she is able to choose more expensive food as she is richer now. Thus, the demand will increase, and it gives more satisfaction to her. She also perceives hawker food is an inferior goods when she has more income to dine at restaurant.

e) The owner of fine dining restaurant will enjoy an increase in revenue as more people will buy normal luxury goods as they want to enjoy a higher quality of foods. The income elasticity of demand is greater than 1. Hence, it is a normal luxury good therefore change in quantity demanded will be more proportionate to than increase in income.

f) % change in quantity demanded for onions = (22-20) / 20 * 100% = 10%% change in income = (7000 - 6000) / 6000 * 100 = 16.667%Income elasticity = 10% / 16.667% = 0.5999 = 0.60 (round up)  Since the income elasticity of 0.6 is positive and between 0 to 1, Onions are normal essential (necessity) goods for Sandy.

g) Comparing with her income elasticity of demand for restaurant diners and onion, even though both are positive and normal goods, the key difference is the type of normal goods they are belong to.For restaurant dinners, since the income elasticity of demand for restaurant dinner of 6 is greater than 1, it shows that it is a normal luxury good as the quantity demanded changes proportionately more than the change in incomes.Conversely, the income elasticity of demand for onions is 0.6 which is lower than 1. It shows that it is a necessity (essential) good. Thus, the quantity demanded for Onions is less proportionate than increase in income.

- XiaoLi

# data[].attributes.body
1. % chg in qty (4-2)/2 X100= 100%,  % chg in income=(7,000-6,000)/6000=16.67%,

100/16.67=5.99=6
change in qty%/change in income%                                                                                                   b) it will become more elastic, as when income rise she will dine more times at the restaurant

c) % chg in qty= -2/15 X100=-13.3333%, % chg in income  (7000-6000)/6000=16.67%, -13.33%/16.67%=-0.79 ,becomes more income inelastic,as when income rise she wants to eat in places like restaurants more as compared to hawker centers, and the no,of times she eats in the hawker center will drop

d) when income rises,people want to try more higher quality food

e) the fine dining restaurant owner,more people want to try more higher quality food

f) chg in qty%=((22-20)/20)X100=10%, change in income %=16.67%, 10%16.67% =0.60

g) income is more elastic for restaurants as compared to the onions, as the % change in quantity for restaurants is higher than for onions, moreover the %chg in income is much higher as compared to the %chg in qty for onions making it more income inelastic

# data[].attributes.body
Income Elasticity (I_E )=  (Percentage change in quantity demanded)/(Percentage change in income)

a. % change in quantity demanded = (4-2) / 2 x 100% = 100%

% change in income = (7,000 – 6,000) / 6,000 x 100%

= 16.667%

Income elasticity = 100 / 16.667  = 6

b. When income increases by 16.67 %, quantity demand for restaurant meal will increase by more than proportionate which is 100%. The value of sandys income elasticity of demand (6) is positive and greater than 1. Therefore, this suggest that as her income increase, her demand for restaurant is more elastic

The increase in income leads her to purchase luxury goods by more than proportionate such as restaurant dining

c. % change in quantity demanded = (13-15) / 15 x 100% = 13.333%

% change in income = (7,000 – 6,000) / 6,000 x 100% = 16.667%

Income elasticity = 13.33 / 16.67 = -0.79

The income elasticity of demand calculated is <1, which states that income is elastic and it’s a normal essential good

d. As her income increase, she is able to afford the food from restaurants.

e. I feel that the owner of a fine dining restaurant would experience an increase in revenue as people would be able to afford the food from a fine dining restaurant when their salary increase. Thus, the demand will be higher. However, the demand for chicken rice stall will decrease.

f. % change in quantity demanded = (22-20/22)x100% = 10%

% change in income = 16.667%

income elasticity = 10% / 16.667% = 0.60%

Therefore, onions are normal essential goods as its < 1 and the income is elastic

g. The difference is that there is a proportionate change in the restruant diners compared to the

# data[].attributes.body
a.
Percentage change in quantity demanded = (Final quantity – Initial quantity / Initial quantity ) x 100%                                              = (4 – 2/2) x 100%                           = 100%

Percentage change income = (Final income – Initial income / Initial income ) x 100%                  = ($7000 - $6000/$6000) x 100%
= 16.67%

Income Elasticity of Demand =
100%/16.67%
= 5.998
~ 6

b. When income increase(16.67%), quantity demanded for restaurant meal increase by more than proportionate(100%).  The value of Sandy’s income elasticity of demand (6) is positive and greater than 1. Therefore, this suggest that as her income increases, her demand for restaurant is income elastic.

The increase in income leads her to purchase luxury goods by more than proportionate such as restaurant dining as compared to others.
c.
Percentage change in quantity demanded = (13 – 15/15) x 100% = -13.33%

Percentage change in income = 16.67%

Income Elasticity of Demand =
-13.33%/16.67% = -0.8

The value of Sandy’s income elasticity of demand is negative and lesser than 1. Therefore, this suggest that as her income increases, it leads to a decrease in demand of her dining at the hawker center.

# data[].attributes.body
a)Income elasticity: % change in quantity demand / % change in income

% change in income = (7,000 – 6,000)/6,000 x 100%

= 16.67%

% change in quantity demanded = 100%

Income elasticity: 100% / 16.67 % = 6%

b) When income increase (16.7%), quantity demanded for restaurant meal increase by more than proportionate 100%. The value of Sandy's income elasticity of demand is positive and greater than 1. therefore, this suggest that as her income increase, her demand for restaurant is income elastic.

c) % change in income = 16.67%

% change in quantity demanded = 13 – 15 / 15 x 100%

= -13.33%

Income elasticity: -13.33% / 16.67% = -0.79% (0.8%)

The value of income elasticity of demand decreases therefore it is an inferior good?

D) Sandy have more money to spend therefore her demand for luxury good would also increase.

e) Fine dining is (normal (luxury)). Hawker centre food is (inferior). During economy boom when income all (increase), the demand for fine dining will (increase) and demand for hawker will (decrease). Therefore, owner of (fine dining) will earn higher revenue than.

•

f) 0.6 (less than 1 more than 0 à normal necessity)

% change in income = 16.67%

% change in quantity demanded = (22 – 20) / 20 x 100

= 10%

Income elasticity = 10 / 16.67

= 0.59% / -0.6

•

g) Onion is normal essential and fine – dining is normal luxury goods. Proportion increase in fine – dining will be higher as it is elastic since normal essential is inelastic.

# data[].attributes.body
a)

Income Elasticity (Restaurant Dining)

= [((4-2) / 2) x 100%] / [((7000 - 6000) / 6000) x 100%]

= 100 / 16.67

= 6.00

b)

Positive income elasticity which represents a normal good; income and quantity demanded move in same direction.

c)

Income Elasticity (Hawker Centre)

= [((13-15) / 15) x 100%] / [((7000 - 6000) / 6000) x 100%]

= - 13.33 / 16.67

= - 0.80 (Income Inelastic. As income increases, demand for such good decreases.)

d)

An increase in income results to demand of inferior goods to decrease and hence why Sandy dine more frequently at restaurants.

e)

The owner of the fine dining restaurant.

f)

Income Elasticity (Onions)

= [((22-20) / 20) x 100%] / [((7000 - 6000) / 6000) x 100%]

= 10 / 16.67

= 0.60 (Income Elastic, As income increases, demand for such good increases.)

g)

The restaurant has a positive income elasticity of demand as compared to the onions which has an inelastic income of demand. When there is an increase of income, there will be increase in quantity demand for both restaurant and onions.

# data[].attributes.body
a.Income Elasticity of Restaurant -> (4-2/2) / (7000-6000/6000) = +6

b. This indicates that Sandy dines more frequently at restaurants

c. Income Elasticity of Hawker ->(13-15/15) / (7000-6000/6000) = -0.8

This means that there is an decrease in the demand of dining at a Hawker.

d. Sandy has an increase in her income thus able to afford and enjoy the dining experience at restaurants as compared to hawker centre.
e. The owner of a fine dining restaurant - There is an positive income elasticity towards fine dining so there will be an increase in sales and the total revenue will also increase

f. Income Elasticity of onions ->

(22-20/20) x100% / (7000-6000/6000) x100% = 0.6

Onion is a considered essential goods to sandy thus there will not be a larger change

g. Both are normal goods, onion is smaller than 1 so it is essential while restaurant is greater than 1 hence it is luxury.

The restaurant will have a larger change in quantity as compared to onions as it is more elastic as compared to onion.

R: Quantity change proportionately more than change in income.

O: Quantity change proportionately less than change in income

# data[].attributes.body
a. % change in QD = (4-2) / 2 x 100 = 100%
% change in income = (7,000 – 6,000) / 6000 x 100 = 16.6667%

Income elasticity of demand = 100 / 16.6667 = 6

b. When income increase(16.67%), quantity demanded for restaurant meal increase by more than proportionate (100%). The value of Sandy’s income elasticity of demand(6) is positive and greater than 1. Therefore, this suggest that as her income increases, her demand for restaurant is income elastic. The increase in income leads her to purchase luxury goods by more than proportionate such as restaurant dining.

c. % change in QD = (13-15) / 15 x 100 = -13.3333%

% change in income = (7,000 – 6,000) / 6000 x 100 = 16.6667%

Income elasticity of demand = -13.3333 / 16.6667
= -0.799 (-0.8)

The value of income elasticity demanded is less than 0, therefore it will be an inferior good. There is a decrease in quantity demanded when there is an increase in income.

d. Sandy have decided to dine more frequently at restaurants as she has an increase in her income. Therefore, she can choose to consume more expensive goods, which are luxury goods

e. The owner of a fine-dining restaurant will enjoy an increase in revenue as Singaporeans experiencing a salary increase will lead to the owners enjoying increase in sales and revenue.

f. % change in QD = (22-20) / 20 x 100 = 10%

% change in income = (7,000 – 6,000) / 6000 x 100 = 16.6667%

Income elasticity of demand = 10 / 16.6667 = 0.599 (0.6)
Onion is considered an essential good as when the income increases, the change in quantity demanded is less than proportionate change in income.

g. The key difference between the (a) and (f) will be the category of normal goods that the onions and restaurant dinners belonged in.

For the onions, it has an income elasticity of 0.6, which is considered an essential good where the value is more than 0 but is lesser than 1.

For the restaurant dinners, it has an income elasticity of 6, which is considered a luxury good where the value is more than 1. This shows that the change in quantity is proportionately more than the change income.

# data[].attributes.body
a) % change in quantity demand = (4-2)/2*100% = 100%

% change in income = (7000-6000)/6000*100% = 16.667%

income elasticity = % change in quantity demand/% change in income = 100/16.6666 = 6

# data[].attributes.body
a. Ie= (4-2/2)x100/(7000-6000)/6000x100

Ie=6

b. When the income increases, the quantity demanded for restaurants increase by more than proportionate (16.67% vs 100%), hence proving to be a normal luxury good that is income elastic. As the Ie is positive, and the quantity demanded increases when the income increases, restaurant dining is a normal good. As the Ie is more than 1, restaurant dining is a normal luxury good that is income elastic.

c. Ie= (13-15/15)x100/(7000-6000)/6000x100

Ie=-0.8

As the Ie is negative, and the quantity demanded decreases when the income increases, hawker meals is an inferior good. As the Ie is less than 0, hawker meals are an inferior good.

d. Restaurants may be more comfortable to dine in, as they have air-conditioning. Restaurants are also suitable for more formal occasions or special occasions. Since Sandy has more disposable income, she is able to choose to dine at restaurants for these formal or special occasions.

e. The owner of a fine-dining restaurant would enjoy an increase in revenue. This is because inferior goods such as hawker meals decrease in sales and revenue as incomes increase and normal luxury goods such as restaurant dining increase in sales and revenue when income increases.

Inferior goods have an inverse relationship between income and quantity demanded while normal luxury goods have a direct relationship between income and quantity demanded.

f. Ie=(22-20/20)x100/(7000-6000)/6000x100

Ie=0.6

As the Ie is positive but less than 1 and more than 0, and the quantity demanded does not increase or decrease much when the income increases. When the income increases and the quantity demanded for onions has a less than proportionate change, we can tell that onions are a income inelastic good. Onions are a normal essential good that is price inelastic. As the Ie is less than 1, onions are a normal essential good that is income inelastic.

g. With an increase in income, normal essential goods that have an Ie of less than 1 but more than 0 that are income elastic do not enjoy significant increase in sales and revenue while normal luxury goods that have an Ie of more than 1 that are income elastic will enjoy increase in sales and revenue.

Normal luxury goods such as restaurant dining had a 100% increase in quantity demanded. Normal essential goods had a 10% increase in quantity demanded.

With an increase in income, consumers now have enough disposable income to consume normal luxury goods, so they will start consuming them whenever they can. However, with an increase in income, consumers will not start consuming more or lesser of normal essential goods even though they have enough disposable income as these goods are used on a daily basis and are essential to the customer, hence the amount of normal essential goods consumed will not increase by a huge amount as consumers were already consuming the amount that is optimal for them as they need a optimal amount of the normal essential good on a daily basis.

# data[].attributes.body
a)  % change in QD/
% change in income

=        [(4-2)/2] x 100% /

[(7000-6000)/6000] x 100%

ey = 6

b) When the income increase by 16%, the quantity demanded for restaurant meal increase by more than proportionate (100%). The value of this income elasticity of demand is positive and greater than 1. Therefore, this suggest that as her income increases, her demand for restaurant is income elastic.

The increase in income leads her to purchase luxury goods by more than proportionate such as restaurant dining.

c) % change in QD/

% change in income

=   [(13-15)/15] x 100% /

[(7000-6000)/6000] x 100%

ey = -0.8

The value of income elasticity of demand is less than 0 and it is negative. Thus, it is an inferior good. There is a decrease in quality demanded when there is an increase in income

d) Sandy has more purchasing power since her income increases. So, she wants to buy a higher quality food

e) The owner of a fine-dining restaurant. This is because, with higher income, more people would be able to afford and is more willing to buy higher quality foods. So, fine-dining restaurant will see an increase in revenue. On the other hand, the chicken rice stall owner will most likely to see a decrease in revenue as it is considered as an inferior good as compared to the fine-dining restaurant. When consumers have higher purchasing power, they will buy lesser of inferior goods and more of normal goods.

f) (22-20)/20 x 100% /

(7000-6000)/6000 x 100%

= 0.6

Onion is considered an essential goods to sandy. When income increase, the quantity demanded increase by less than one.

R: quantity change proportionately more than change in income

O: quantity change proportionately less than change in come

g) Onion’s income elasticity is 0.6, whereas restaurant dining is 6. The restaurant dining have a positive income elasticity of demand. When there is a change in income, it will change the quantity demanded for the restaurant dining. An increase in income will increase the quantity demanded for restaurant dining significantly.

Onion have a positive value of 0.6, however it is lesser than one, so this means that onion have an inelastic income of demand. When there is a change in income, there will be no significant change in the quantity demanded for onions. However, the quantity demanded is still proportional to the change in income. An increase in income will cause a slight increase in quantity demanded for onions.

# data[].attributes.body
A. IED = % change in QD / % change in income for restaurant dining

% change in QD = 4-2/2 x 100% = 100

% change in income = (7k – 6k/6k) x 100% = 16.666

IED = 100/ 16.666 = 6

B. The value of Sandy’s income elasticity of demand is 6 which is  positive and more than 1. IED is more than 1, when income increases by 16.67%, quantity demand for restaurant increases more than proportionate by 100%. Therefore, it is a luxury goods and demand for restaurant is income elastic.

The increase in income leads her to purchase luxury goods by more than proportionate such as restaurant dining.

C. IED = % change in QD / % change in income for hawker meals

% change in QD =13-15/15 x 100% = -13.3333

% change in income = (7k – 6k/6k) x 100% = 16.666

IED = -13.333/ 16.666 = -0.8

The IED is -0.8 which is less than 0. IED is less than 0. When income increases, quantity demand for decreases less than proportionate. Therefore, it is an inferior goods.

d. Since there is an increase in her income, she can now afford to purchase expensive goods such as luxury goods. Hawker centre is an example of an inferior goods which is why Sandy dine more frequently at restaurants as it is a luxury goods.

e. The owner of a fine-dining restaurant will enjoy an increase in revenue as with an increase in income, individual would spend more on expensive goods. Therefore with an increase in income, the restaurant will have increase in sales and revenue.

f. IED = % change in QD / % change in income for onions

% change in QD = 22 -20/20 x 100% = 10

% change in income = (7k – 6k/6k) x 100% = 16.666

IED = 10/ 16.666 = 0.6

The IED is 0.6 which is more than 0, less than 1. If an IED is more than 0 but less than 1, it is an essential goods.

g. IED for restaurant dining is 6 and IED for onions is 0.6, both are positive which indicates it’s a normal goods however the difference is the type of normal goods. For restaurant dining is luxury goods whereas for onions is an essential goods. For luxury, as the income increase, the quantity demanded is more than proportionate.

# data[].attributes.body
a)Income elasticity of demand = % change in quantity demanded/ % change in income

Change in income(%) = 1000 (7000-6000)/6000

= 0.167

= 16.667%

Change in quantity demanded = 100% as it rises by twice greater than previous frequency for consuming goods and services by having change in quantity
demanded.

Income elasticity of demand   = 100/16.666 =   6

b) According to Sandy’s income elasticity of demand, since the value of IES is greater than 1, it is classified under to be luxury goods by which the IE states

IE > 1.

c) % change in quantity demanded = (13-15/15)*100% = -13.333% (negative change)

% change in income (IES) = 16.667%

Income elasticity: -13.333% (change in quantity demanded)/ 16.667% (change in income)= -0.79%

Therefore, it is evident that demand decreases over as income rises or increases, thereby, it is said to be inferior good consisting least value.
d) Yes, it depends on her preference and choice on the type of food as she is able to afford more different kinds and variety of delicious tasty carving meals due to increased in her income flow. Also, most likely people will tend to look after to go restaurant rather than on hawker centre to show off their wealth status if they can manage to afford and which also gives greater attention rendered to customers of the particular restaurant through having adequate food ordering taking personnel to exhibit professionalism.

e) It depends on the level of demand of their food preference being indeterminate.

f) % change in quantity demanded = (22-20/22)*100% = 10%                                                  change in income = 16.667%

IED = 10%/16.667% = 0.60% (0.6)

Therefore, it is said to be normal essential goods since it is inelastic lesser than 1.

# data[].attributes.body
a)Income elasticity of demand= 100%/ 16.67% = 6% (round up)

b)Her restaurant dining is a luxury good as her income elasticity is positive and greater than 1.

c)Income elasticity of demand = -13.33%/ 16.67% = -0.8% (round up)

It is an inferior good as her income elasticity of demand is negative and less than 1.
- Ludwig (T5)

# data[].attributes.body
a. Percentage change in quantity demanded = (4 -2) /2 x 100 = 100%
Percentage change in income = (7000 - 6000)/6000 x 100 = 16.67%
Income elasticity = 100/16.67 = 6

b. The income elasticity is positive 6 which is more than 1, which shows that it is normal luxury good. The quantity demand is more proportionate as income increases

c. Percentage of quantity demand change = (13 - 15)/15 x 100 = -13.33%

Percentage of income change = (7000 - 6000)/6000 x100 = 16.67%

Income elasticity = -13.33/16.67 = - 0.80 (2dp)

Interpretation: hawker centre for Sandy is  an inferior as the income elasticity is negative. The quantity demand is less proportionate as it decreases even though the income increases

d. As income increases, she can afford more to dine in at a more expensive place like restaurants compared to hawker center

e. The owner at the fine dinning restaurant, as according to income elasticity, the demand to dine in in restaurant is increasing while the demand to dine in at hawker center decreases as income increases.

f. Percentage of quantity demand change = (22-20)/20 x 100 = 10%

Percentage of income change = (7000 - 6000)/6000 x100 = 16.67%

Income elasticity = 10/16.67 = 0.60(2dp)

The income elasticity is positive 0.60 which is less than 1, which shows that it is normal essential good. The quantity demand is more proportionate as income increases

g. For onions it is normal essential goods as the income elasticity is positive but less than 1. for restaurant, it is normal luxury goods as the income elasticity is positive and more than 1 . The percentage in change of income is the same while the percentage change in quantity demand is different even though both increases by 2.