If Vicky's income increases by 8% and she increases her consumption of music downloads by 4%,then her income elasticity of demand for music downloads is
A)4.0.
B)-0.5.
C)-2.0.
D)2.0.
E)0.5.

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it is 4% / 8% = 0.5.

If Vicky's Income Increases by 8% and She Increases Her