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The question in the image asks Joe about the **income elasticity of demand** for organic foods, given that his income increased by 20% and his demand for organic foods rose from 0 to 10.

### Formula for Income Elasticity of Demand:

\[
E = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in income}}
\]

Let's calculate:

1. **Percentage change in quantity demanded**:  
   The initial demand is 0 and the final demand is 10. So the percentage change in quantity demanded is technically infinite, but we can approximate it by considering a small base (since starting from 0 makes elasticity technically undefined in typical methods).
   
2. **Percentage change in income**:  
   The income increased by 20%, which is given in the problem.

So, because the initial demand was 0 and Joe's demand for organic food went from 0 to 10 units, this implies that organic food is a **luxury good** for Joe, with a high (theoretically infinite) elasticity in this case.

Would you like a more in-depth explanation, or do you have any questions?

Here are 5 questions for further understanding:
1. What does an infinite income elasticity imply about a good?
2. How would the calculation differ if Joe initially had some demand for organic foods?
3. What is the difference between normal goods and luxury goods in terms of elasticity?
4. How is income elasticity different from price elasticity of demand?
5. Can income elasticity ever be negative? If so, when?

**Tip**: Income elasticity helps businesses understand how demand for their product will change with consumer income adjustments, aiding in strategic decision-making.

Joe, when your income increased by 20 percent, you increased your demand for organic foods from 0 to 10. What is your income elasticity for organic foods?

Learn how to calculate the income elasticity of demand for organic foods. This question involves Joe's 20% income increase and a change in demand from 0 to 10 units, exploring the impact on the demand for luxury goods.

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