If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is
A) 0.5.
B) 1.0.
C) 2.0.
D) Not enough information is given to answer this question.

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it is 40% / 20% = 2.0.

If Camila's Income Rises by 20 Percent, And, as a Result