If income increases by 2.0 percent, and quantity demanded of a good increases by 0.2 percent, the income elasticity for the good is
A) 0.22.
B) 0.002.
C) 0.10.
D) 1.00.

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 0.2% / 2.0% = 0.10.

If Income Increases by 2