Arista always spends 10 % of her income on whatzits. Assume that her income increases by some percentage while the price of whatzits remains constant (and that all whatzits cost the same). What is her income elasticity of demand for whatzits?
I know elasticity of demand is either less than 1 or more than 1. Since the equation for elasticity of income is quantity divided by income I dont understand what number to put for the numerator.
? / 10 %. = 1
Will the answer be positive 1 or negative 1.