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April 2010 Q22

K

kika258

Member
April 2010 Q 22 says:

A consumer always spends one quarter of his income on travel. What are his price elasticity of dmand for travel and his income elasticity of demand for travek respectively:

A 1 and 0.25
B 0 and 0.25
C 1 and 0
D 0 and 1.

D is the answer. Can someone explain why? I can't figure out how could i have come to the answer.
 
This question contains an error and none of the answers are correct.

The correct answer is:

-1 and 1

This is explained fully in the Subject CT7 ASET.

I hope this helps! :)
 
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