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

Question

Quizplus · Accepted Answer

The income elasticity of demand is the percentage change in the quantity demanded of a good or service in response to a percentage change in income. In this case, the income elasticity of demand for smartphone apps is 5.

Therefore, if income increases by 10%, the quantity demanded of smartphone apps would increase by 5 times that amount, or 50%.

Thus, the answer is (C) 50%.

If the Income Elasticity of Demand for Good Smartphone Apps