If jack bought 12 dvds last year when his income was $40,000 and he buys 14 dvds this year when his income is $43,000, then his income elasticity of demand is which means that dvds are a(n) good for jack.

His income elasticity of demand is 0.16  which means that DVDs are a(n) normal income elasticity of demand as it is less than 1

Explanation:

In this question, we use the formula of income elasticity of demand which is shown below:

Income elasticity of demand = Percentage change in quantity demanded ÷ Percentage change in income

where,

Percentage change in quantity demanded is calculated by

= New Quantity - Old quantity ÷ New Quantity + Old quantity

= 14 - 12 ÷ 14 + 12

= 2 ÷ 26

= 0.07692

Percentage change in income is calculated by

= New income - Old income ÷ New income + Old income

= $43,000 - $40,000 ÷ $43,000 + $40,000

= $3,000 ÷ 63,000

= 0.47619

Now put these values over the above formula

So, the answer is = 0.07692 ÷ 0.47619 = 0.16

Hence, his income elasticity of demand is 0.16  which means that DVDs are a(n) normal income elasticity of demand as it is less than 1

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