DINKS are households with "double income, no kids", and such households are invading your neighbourhood. You decide to take advantage of this influx by starting a gourmet take-away food store. Assume that these DINKS in your neighbourhood are your only potential customers. You know that the price elasticity of demand for your food from DINKS is 0.5, and their income elasticity of demand is 1.5. From the standpoint of the quantity that you sell, explain which of the following changes would concern you most. First, the number of DINKS in your neighbourhood falls by 10 percent. Second, the average income of DINKS falls by 5 percent.

DINKS are households with "double income, no kids", and such households are invading your neighbourhood. You decide to take advantage of this influx by starting a gourmet take-away food store. Assume that these DINKS in your neighbourhood are your only potential customers. You know that the price elasticity of demand for your food from DINKS is 0.5, and their income elasticity of demand is 1.5. From the standpoint of the quantity that you sell, explain which of the following changes would concern you most. First, the number of DINKS in your neighbourhood falls by 10 percent. Second, the average income of DINKS falls by 5 percent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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