The income elasticity of demand refers to:
A) a change in income following a change in quantity demanded.
B) the substitution of one good for another as income changes.
C) the percentage change in quantity demanded resulting from a 1-percent increase in income.
D) the change in income required for quantity demanded to change by 1%.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the percentage change in quantity demanded resulting from a 1-percent increase in income. Therefore, option C is the correct choice. Options A, B, and D are incorrect as they do not accurately describe the concept of income elasticity of demand.

The Income Elasticity of Demand Refers To