Income elasticity measures the change in quantity demanded of some product with respect to changes in
A)the demand of the product.
B)the price of another related product.
C)its price.
D)the supply of the product.
E)households' income.

Question

Quizplus · Accepted Answer

Income elasticity measures how much the quantity demanded of a product changes in response to changes in households' income. This means that when households' income rises, they are likely to purchase more of the product, and when their income falls, they may purchase less of the product. Income elasticity is calculated as the percentage change in quantity demanded divided by the percentage change in income.

Income Elasticity Measures the Change in Quantity Demanded of Some