If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand?
A)0.5
B)-0.5
C)2.0
D)-2.0
E)1.5

Name: If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand? A)0.5 B)-0.5 C)2.0 D)-2.0 E)1.5
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Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income, which in this case is 5% / 10% = 0.5.

If a 10 Percent Increase in Income Results in a 5