The income elasticity of demand measures the:
A) responsiveness of the quantity demanded of a good to changes in the consumer's income.
B) sensitivity of the quantity demanded of one good to the change in the price of another
C) fraction of income or household spending allocated to a particular good.
D) proportion of total income that is spent on consumption and on saving.

Question

Quizplus · Accepted Answer

The income elasticity of demand specifically measures how the quantity demanded of a good changes in response to changes in consumer income, making option A correct. Options B, C, and D describe other economic concepts: cross-price elasticity of demand, budget share, and the marginal propensity to consume/save, respectively.

The Income Elasticity of Demand Measures The