Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

The typical consumer allocates expenditure to food, accommodation and clothing in the ratio 5 : 3 : 2. Over one year, the price of food increases by 10 %, the price of accommodation stays the same and the price of clothing decreases by 5 %. By how much does the Consumer Price Index increase over the year?

  • A2.5 %
  • B4 %
  • C5 %
  • D6 %

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