Calculate the income-elasticity of demand for toilet paper

Reference no: EM131916147

Problem

Suppose that when the average family income rises from $30,000 per year to $40,000 per year, the average family's purchases of toilet paper rise from 100 rolls to 105 rolls per year.

a. Calculate the income-elasticity of demand for toilet paper.

b. Is toilet paper a normal or an inferior good?

c. Is the demand for toilet paper income-elastic or income-inelastic?

Reference no: EM131916147

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