Suppose 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 measures how much the quantity demanded of a good responds to a change in consumers' income. With an income elasticity of 2, a 10 percent increase in income leads to a 20 percent increase in the quantity of jewelry purchased.

Suppose the Income Elasticity of Demand for Jewelry Is 2