Suppose when the consumer's income rises by 100%, the consumer's consumption of good $x$ only increases by 1%. We can infer that the consumer's income elasticity for good $x$ is
A) -0.01
B) -1
C) 0.01
D) 1

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. In this case, the percentage change in consumption of good x is 1% and the percentage change in income is 100%, hence the income elasticity of demand for good x is (1%/100%) = 0.01. Since the change is positive, we know that good x is a normal good. Therefore, the correct answer is C.

Suppose When the Consumer's Income Rises by 100%, the Consumer's xxx

Suppose When the Consumer's Income Rises by 100%, the Consumer's $x$