The income elasticity of demand measures
A)the relative certainty of future income
B)how elastic supply is compared to demand
C)the percent change in quantity demanded relative to the percent change in income
D)the percent change in income relative to the percent change in quantity demanded
E)how much income will stretch to make expected payments

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the percent change in quantity demanded relative to the percent change in income. It shows how sensitive demand is to changes in income, and whether a good is a normal good (with a positive income elasticity) or an inferior good (with a negative income elasticity).

The Income Elasticity of Demand Measures