Blake eats two bags of potato chips each day. Blake's hourly wage increases from $9 to $15, and he decides to stop eating generic chips and instead eats a name brand potato chip. Use the midpoint method to calculate Blake's income elasticity of demand for generic potato chips.

Using the midpoint method, Blake's income elasticity of demand for generic potato chips is given by the change in demand (D) multiplied by his average income (I), divided by the change in income multiplied by the average demand:

[tex]E=\frac{\Delta D}{\Delta I}*\frac{I_{avg}}{D_avg}\\E=\frac{0-2}{15-9}*\frac{\frac{9+15}{2}}{\frac{2+0}{2} }\\E=-4\ units[/tex]

Blake's income elasticity of demand is -4 units.

Answer Link

ewomazinoade ewomazinoade · Answer 2 · 2021-10-26T14:28:47+02:00

Blake's income elasticity of demand for generic potato chips is 4.

Income elasticity of demand measures how the quantity demanded of good responds to changes in the income of an individual.

Income elasticity of demand = midpoint change in quantity demanded / midpoint change in income

Midpoint change in income = change in income / average of both income

Change in income = $15 - $9 = $6

Average of both income = ($15 + $9 ) / 2 = $12

Midpoint change in quantity demanded = $6 / 12 = 0.5

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

Chang in quantity demanded = 0 - 2 = -2

Average of the demand = (0 + 2) / 2 = 1

midpoint change in quantity demanded = -2/ 1 = -2

Income elasticity of demand = -2/0.5 = -4 = 4

To learn more, please check: https://brainly.com/question/15313354?referrer=searchResults