Ray just got a raise,and decided to splurge on a fancy dinner to celebrate.The change to Ray's demand for fancy dinners could be measured by the:
A) price elasticity of supply.
B) price elasticity of demand.
C) cross-price elasticity.
D) income elasticity of demand.

Question

Quizplus · Accepted Answer

The change in Ray's demand for fancy dinners after getting a raise can be measured by his income elasticity of demand, which measures the responsiveness of demand to changes in income.

Ray Just Got a Raise,and Decided to Splurge on a Fancy