A 10 per cent increase in income has caused a 5 per cent decrease in the quantity demanded. The income elasticity is
A) 2.0.
B) - 2.0.
C) 0.5.
D) - 0.5.

Name: A 10 per cent increase in income has caused a 5 per cent decrease in the quantity demanded. The income elasticity is A) 2.0. B) - 2.0. C) 0.5. D) - 0.5.
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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.

A 10 Per Cent Increase in Income Has Caused a 5