If quantity demanded of a good falls by 2% when income falls by 10%, the good's demand is
A) price sensitive.
B) income-inelastic.
C) income-elastic.
D) price insensitive.

Question

Quizplus · Accepted Answer

The good's demand is considered income-inelastic because the percentage change in quantity demanded (2%) is less than the percentage change in income (10%), indicating that demand does not significantly change with income changes.

If Quantity Demanded of a Good Falls by 2% When