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Answer :
Final answer:
The income elasticity of demand for ice cream when the consumer doubles their consumption as income rises by 25% is 4.00. Therefore, the correct answer is b) 4.00.
Explanation:
If a consumer doubles her quantity of ice cream consumed when her income rises by 25%, then her income elasticity of demand for ice cream is calculated by dividing the percentage change in quantity demanded by the percentage change in income. Using the formula:
Income Elasticity of Demand = (% change in quantity demanded) / (% change in income)
In this case, the quantity of ice cream consumed has doubled, which is a 100% increase. The income has increased by 25%. Plugging these numbers into the formula gives us:
Income Elasticity of Demand = (100%) / (25%) = 4.00
Therefore, the correct answer is b) 4.00.
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