If your income increased by 10% and the quantity of pizza you demanded increased by 5%, your income elasticity of demand for pizza is:
A) 0.5
B) 2.0
C) 0.2
D) 1.0

Name: If your income increased by 10% and the quantity of pizza you demanded increased by 5%, your income elasticity of demand for pizza is: A) 0.5 B) 2.0 C) 0.2 D) 1.0
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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 5%/10% = 0.5.

If Your Income Increased by 10% and the Quantity of Pizza