The sensitivity of the quantity demanded to the total money income of consumers in a market is measured by the ________ elasticity of demand.
A) income
B) price
C) cross
D) equilibrium
E) arc

Question

Quizplus · Accepted Answer

Income elasticity of demand measures the percentage change in quantity demanded in response to a percentage change in income of consumers. Thus, it directly measures the sensitivity of quantity demanded to changes in consumer income, making it the best choice for the given question. Price elasticity of demand measures the sensitivity of quantity demanded to changes in price, while cross elasticity of demand measures the sensitivity of quantity demanded of one good to changes in the price of a related good. Equilibrium elasticity is not a commonly used term, and arc elasticity is a method of measuring elasticity that captures changes in both price and quantity.

The Sensitivity of the Quantity Demanded to the Total Money