Suppose that the income elasticity of demand for fresh vegetables is 0.26.If buyers' incomes rise by 10 percent,then
A)the demand curve for fresh vegetables will shift to the left
B)the quantity of fresh vegetables demanded will rise by 2.6 percent
C)the quantity of fresh vegetables demanded will rise by 12.6 percent
D)there will be a movement down and to the right on the demand curve for fresh vegetables
E)there will be a movement up and to the left along the demand curve for fresh vegetables

Question

Quizplus · Accepted Answer

The income elasticity of demand measures how much the quantity demanded of a good responds to a change in income. With an elasticity of 0.26, a 10% increase in income will lead to a 2.6% increase in the quantity demanded (0.26 * 10% = 2.6%).

Suppose That the Income Elasticity of Demand for Fresh Vegetables