<p>Hints: </p>

<ul>
<li><p>Looking at the definitions, if the income elasticity of demand for apples is 2, how much does apple demand increase when consumers' income increase by 10%?</p></li>
<li><p>Looking at the definitions, if the cross elasticity of demand between apple quantity and the orange price is 0.5, how much does apple demand decrease when the orange price falls by 15%?</p></li>
<li><p>How might you combine the increase with the decrease?</p></li>
</ul>

<p>Multiplication might be a useful tool.</p>

CC BY-SA 3.0
2016-07-22T18:23:27.827Z
2016-07-22T18:23:27.827Z
Henry
<p>My question:</p>

<blockquote>
  <p>Income elasticity of demand for apple is $\gamma$. Cross elasticity of
  demand between apple quantity and orange price is $\psi$,  What is the
  impact on apple's revenue if consumers' income increase by x% and
  orange price fall by y%?</p>
</blockquote>

<p>What I think the answer is?:
Am I right I say that revenue would increase for the first instance (income) and the revenue will fall for the second instance.  However, how would I know the percentage of revenue increase in the first instances and fall in the second instances?  </p>

<microeconomics><consumer-theory><supply-and-demand><elasticity>
How to interpret income elasticity of demand
June
# How to interpret income elasticity of demand

(Asked by: username_0 on 2016-07-22)

My question:

> Income elasticity of demand for apple is $\gamma$. Cross elasticity of
> demand between apple quantity and orange price is $\psi$, What is the
> impact on apple's revenue if consumers' income increase by x% and
> orange price fall by y%?

What I think the answer is?:
Am I right I say that revenue would increase for the first instance (income) and the revenue will fall for the second instance. However, how would I know the percentage of revenue increase in the first instances and fall in the second instances?

**Tags:** microeconomics, consumer-theory, supply-and-demand, elasticity

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## 1 answers

### Answer by username_1 on 2016-07-22. Score: 3

Hints:

* Looking at the definitions, if the income elasticity of demand for apples is 2, how much does apple demand increase when consumers' income increase by 10%?
* Looking at the definitions, if the cross elasticity of demand between apple quantity and the orange price is 0.5, how much does apple demand decrease when the orange price falls by 15%?
* How might you combine the increase with the decrease?

Multiplication might be a useful tool.


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