If your income goes up by 2% and,in response,the quantity demanded of good x rises by 3%,the income elasticity of demand would be:
A)1.5
B)6
C)3
D)0.20

Name: If your income goes up by 2% and,in response,the quantity demanded of good x rises by 3%,the income elasticity of demand would be: A)1.5 B)6 C)3 D)0.20
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Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it is 3% / 2% = 1.5.

If Your Income Goes Up by 2% And,in Response,the Quantity