If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?
A) -0.5 percent
B) -5 percent
C) 50 percent
D) 0.5 percent
E) 2 percent

Question

Quizplus · Accepted Answer

The percentage change in the quantity consumed can be calculated using the formula for income elasticity of demand: (Income Elasticity of Demand) = (% Change in Quantity Demanded) / (% Change in Income). Given an income elasticity of 5 and a 10 percent change in income, the calculation is: 5 = (% Change in Quantity Demanded) / 10%. Solving for % Change in Quantity Demanded gives 50%.

If the Income Elasticity of Demand for Good Smartphone Apps