The income elasticity of demand is
A) the percentage change in quantity demanded divided by the percentage change in price.
B) the percentage change in quantity demanded divided by the percentage change in income.
C) the percentage change in income divided by the percentage change quantity demanded.
D) the percentage change in price divided by the percentage change in income.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of demand for a good or service to a change in income of consumers. It is calculated as the percentage change in quantity demanded divided by the percentage change in income. Therefore, the correct option is B. Option A is the formula for price elasticity of demand, while options C and D are incorrect statements.

The Income Elasticity of Demand Is