Answer:
income elasticity = -0.385
Interpretation:
if income increase then potatoes demand decrease
if income drops, potatoes demand increase.
-40 x -.385 = 15.4 increase
60 x 15.4 = 69.24 ≅ 70
Explanation:
midpoint formula:
[tex]\frac{q_2-q_1}{(\frac{q_1+q_2}{2})} \div\frac{p_1-p_2}{(\frac{p_2+p_1}{2})}[/tex]
q1 60
q2 70
p1 30,000
p2 20,000
[tex]\frac{70-60}{\frac{60+70}{2}} \div\frac{20,000-30,000}{\frac{20,000+30,000}{2}}[/tex]
[tex]\frac{10}{\frac{130}{2}} \div\frac{-10,000}{\frac{50,000}{2}}[/tex]
[tex]0.153846154 \div -0.4 [/tex]
income elasticity = -0.385
