Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals. You are advised to show your working. Extract A Takeaway consumption and median income in the UK Average number of takeaway meals consumed per year, per person 2013 140 2014 144 Median annual income for full-time employees 2013 £27,000 2014 £27,195 (Sources: adapted from © Crown copyright, 2017 RetailMeNot UK Limited and © Associated Newspapers Ltd)

A-Level Edexcel Business Assessing Competitiveness: Using the data in Extract A, cal

Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals - Edexcel - A-Level Business - Question 1 - 2018 - Paper 1

Question 1

Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals. You are advised to show your working. Extract A Tak... show full transcript

Worked Solution & Example Answer:Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals - Edexcel - A-Level Business - Question 1 - 2018 - Paper 1

Step 1

Calculate the Percentage Change in Quantity Demanded

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Answer

To find the percentage change in the average number of takeaway meals consumed:

For 2013: 140 meals
For 2014: 144 meals

Using the formula: $\text{Percentage Change} = \frac{(New - Old)}{Old} \times 100$

We have: $\text{Percentage Change} = \frac{(144 - 140)}{140} \times 100 = \frac{4}{140} \times 100 = 2.86\%$

Step 2

Calculate the Percentage Change in Income

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Answer

Now, for the median income:

For 2013: £27,000
For 2014: £27,195

Using the formula: $\text{Percentage Change in Income} = \frac{(New - Old)}{Old} \times 100$

We calculate: $\text{Percentage Change in Income} = \frac{(27195 - 27000)}{27000} \times 100 = \frac{195}{27000} \times 100 = 0.72\%$

Step 3

Calculate Income Elasticity of Demand

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Answer

Using the values obtained for the percentage changes:

Percentage Change in Quantity Demanded = 2.86%
Percentage Change in Income = 0.72%

Using the formula for Income Elasticity of Demand: $\text{Income Elasticity of Demand} = \frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Income}}$

Thus, we have: $\text{Income Elasticity of Demand} = \frac{2.86}{0.72} = 3.97$

Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals - Edexcel - A-Level Business - Question 1 - 2018 - Paper 1

Worked Solution & Example Answer:Using the data in Extract A, calculate, to 2 decimal places, the income elasticity of demand for takeaway meals - Edexcel - A-Level Business - Question 1 - 2018 - Paper 1

Calculate the Percentage Change in Quantity Demanded

Calculate the Percentage Change in Income

Calculate Income Elasticity of Demand

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