If Mr. Brown's income increases by 12 percent and as a result his quantity demanded of music downloads increases by 4 percent, Mr. Brown's income elasticity of demand for music downloads is
A)3.0.
B)0.33.
C)-0.33.
D)-3.0.
E)48.0.

Question

Quizplus · Accepted Answer

Income elasticity of demand (YED) is calculated as the percentage change in quantity demanded divided by the percentage change in income.

YED = (% change in quantity demanded) / (% change in income)

Here, YED = 4% / 12% = 0.33.

Therefore, the answer is B) 0.33.

If Mr Brown's Income Increases by 12 Percent and as a a Result