solution

(a) If per capita annual income in the US increases from $60,000 to $70,000 over 2017-2027, and per capita poultry consumption increases from 110 to 125 pounds over the same period, calculate the income elasticity of demand for poultry in the US. What type of good is poultry for the US consumers? (5 points)

(b) Now, assume that per capita annual income in the US changes from $60,000 to $75,000 over 2017-2030, and this promtps a change in per capita salmon consumption. Find per capita salmon consumption in 2017, if it is projected to reach 4 pounds in 2030 (i.e., after experiencing an income change), and the income elasticity is 1.25.