If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded
A) increases 2 percent.
B) increases 20 percent.
C) decreases 2 percent.
D) decreases 20 percent.
E) increases 12 percent.

Question

Quizplus · Accepted Answer

When the income elasticity of demand for a good is 2, it means that the percentage change in the quantity demanded will be twice as much as the percentage change in income. Therefore, when income rises 10 percent, the quantity demanded will increase by 20 percent (2 times 10 percent).

If the Income Elasticity of Demand for a Good Is