The income elasticity of demand for jewelry is +2. Other things equal, a 10 percent increase in consumer income will
A) decrease the quantity of jewelry purchased by 20 percent.
B) increase the quantity of jewelry purchased by 5 percent.
C) decrease the quantity of jewelry purchased by 5 percent.
D) increase the quantity of jewelry purchased by 20 percent.

Question

Quizplus · Accepted Answer

The income elasticity of demand for jewelry is +2, which means that a 1% increase in income will lead to a 2% increase in quantity demanded of jewelry. Therefore, a 10% increase in income will lead to a 20% increase in quantity demanded.

The Income Elasticity of Demand for Jewelry Is +2