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COVENTRY BUSINESS SCHOOL M17BS: Business Economics for Management Coursework (Question 1) Submitted by YUHUA SONG Lecturer: Dr Keith Gray 1a) To calculate the income elasticity of demand, the following general formula can be used: YED = Proportionate (or percentage) change in quantity demanded Proportionate (or percentage) change in income Consider the elasticity date for Noxt Clothing Ltd, the negative income elasticity coefficient for Jackets of -0.3 indicates that Jackets are the inferior goods. (Goods whose demand falls as people's income rise), also Trainers are not only same, but also are the necessities (A necessity has an income elasticity less than one). Trousers, Sweatshirts and T-shirts are normal goods, which have positive income elasticity of demand. Focus on Jackets, A 1% rise in incomes leads to a fall in the quantity of Jackets demanded of 0.3 %; A 1% rise in incomes leads to decrease 0.5% of Trainers quantity...

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