If the income elasticity of demand for lobster is +1.5, a 5 percent increase in price will cause a 7.5 percent reduction in the quantity of lobster consumed.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in income. It is not related to the price elasticity of demand, which measures the responsiveness of the quantity demanded to a change in price. Therefore, the given statement is not accurate.

If the Income Elasticity of Demand for Lobster Is +1