Question the problem is Per capita income in County A is $48,000.

Per capita income in County

B is $39,000. Physician visits average 4.2 per year in County A and 3.8 per year in County B.
What is the arc income elasticity of demand for visits?
Ans: Income elasticity of demand is the ratio of percentage change in quantity demanded of a
product to percentage change in the income level of consumer. It is a measure of responsiveness
of quantity demanded to changes in consumers income.

Here we can see there is change in the income as well as number of visit of physician
So to calculate is the arc income elasticity of demand for visits we have to calculate the ratio of
change in visit to the change in income.
Therefore arc income elasticity of demand =
Percentage change in quantity demanded/ percentage change in the income
= [(4.2-3.8)/4.2] / [(48000-39000)/48000]
=.0952/.1875
=.5079 ans