The income elasticity of demand is a measure of
A) how demand for a product changes when the price of a substitute or complement product changes.
B) how responsive consumers are to changes in the price of a product.
C) how responsive suppliers are to changes in the price of a product.
D) the extent to which the demand for a good changes when income changes.
E) the extent to which the supply of a good changes when the demand changes as a result of a change in income.

Question

Quizplus · Accepted Answer

The income elasticity of demand is a measure of how much the demand for a product changes in response to a change in income. It provides insight into the relationship between income levels and consumer behavior. A positive income elasticity indicates that as income increases, the demand for a good also increases, while a negative income elasticity indicates the opposite.

The Income Elasticity of Demand Is a Measure of