If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.
A)rise; 2.12; fall
B)rise; 1.0; rise
C)fall; 1.0; rise
D)fall; 2.12; fall

Question

Quizplus · Accepted Answer

Income elasticity of demand measures the responsiveness of quantity demanded to a change in income, and it is expressed as a percentage change in quantity demanded divided by a percentage change in income. A positive income elasticity above 1 indicates a normal good, which means that as income rises, quantity demanded will also rise. Therefore, the correct answer is option B, which states that quantity demanded will rise by 2.12 percent for every 1.0 percent rise in income.

If Income Elasticity of Demand Is 2