If your income goes down by10% and,in response,the quantity demanded of good x falls by 20%,the income elasticity of demand would be:
A)2
B)4
C)0.5
D)0.20

Name: If your income goes down by10% and,in response,the quantity demanded of good x falls by 20%,the income elasticity of demand would be: A)2 B)4 C)0.5 D)0.20
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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 (-20%)/(-10%) = 2.

If Your Income Goes Down By10% And,in Response,the Quantity Demanded