If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income elasticity of demand is
A)-0.67.
B)0.67.
C)1.5.
D)2.

Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, the percentage change in quantity demanded is 4 percent and the percentage change in income is 6 percent. Therefore, the income elasticity of demand is (4/6) = 0.67.

If a 6 Percent Increase in Income Leads to a 4