Which statement is TRUE?
A)If the income elasticity of demand is greater than zero, a good is inferior.
B)If the income elasticity of demand is less than zero, the good is normal.
C)The income elasticity of demand measures the responsiveness of quantity demanded to changes in consumers' incomes.
D)The income elasticity of demand measures the responsiveness of consumers' incomes to changes in quantity demanded.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures how sensitive the quantity of a good is to changes in consumers' incomes. It is calculated as the percentage change in the quantity demanded of a good divided by the percentage change in income. A positive value indicates that the good is a normal good, meaning that as income increases, demand for the good also increases. A negative value indicates that the good is an inferior good, meaning that as income increases, demand for the good decreases.

Which Statement Is TRUE