The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-For a given product, income elasticity of demand relates the percentage change in:
A)quantity demanded to the percentage change in income.
B)quantity demanded to the absolute change in income.
C)income to the percentage change in price.
D)price to the absolute change in quantity demanded.
E)income to the percentage change in quantity available for sale.

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-For a given product, income elasticity of demand relates the percentage change in:
A)quantity demanded to the percentage change in income. 
B)quantity demanded to the absolute change in income. 
C)income to the percentage change in price. 
D)price to the absolute change in quantity demanded. 
E)income to the percentage change in quantity available for sale.

Quizplus · Accepted Answer

Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. It is calculated as the percentage change in quantity demanded divided by the percentage change in income. As such, it relates the percentage change in quantity demanded to the percentage change in income. Option A) correctly states this relationship. Options B), C), D) and E) are not related to income elasticity of demand.

The Figure Given Below Shows the Demand Curves for Five