The table below shows estimates of UK consumers’ income elasticity of demand for holidays in four different countries.
Country Income elasticity of demand
China 0.8
Peru 1.0
Italy 1.4
Spain 2.0
From the data it may be concluded that a 10% rise in real incomes would lead to
A a fall in demand for holidays in China.
B no change in demand for holidays in Peru.
C a 14% increase in demand for holidays in Italy.
D a 2% increase in demand for holidays in Spain.
The answer is a 14% increase in demand for holidays in Italy.
