If income decreases by 20% and, in response, the quantity of housing demanded decreases by 14%, then the income elasticity of demand for housing is
A) -1.
B) -0.7.
C) 0.7.
D) 1.43.

Question

Quizplus · Accepted Answer

Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it is (-14%)/(-20%) = 0.7.

If Income Decreases by 20% And, in Response, the Quantity