The income elasticity of demand measures
A)the responsiveness of quantity demanded to changes in income.
B)how a consumer's purchasing power is affected by a change in the price of a product.
C)the percentage change in the price of a product divided by the percentage change in consumer income.
D)the income effect of a change in price.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the percentage change in quantity demanded in response to a percentage change in income. It measures how sensitive demand for a good is to changes in consumer income. A positive income elasticity indicates that demand for a product increases as income increases, while a negative income elasticity indicates that demand for a product decreases as income increases.

The Income Elasticity of Demand Measures