Income elasticity of demand measures the response of the change in quantity demanded at a specific price to a change in income.

Question

Quizplus · Accepted Answer

Income elasticity of demand is a measure of how sensitive the quantity demanded of a good is to a change in consumer income, while keeping all other factors constant, including the price of the good. So, as income changes, the demand for a good with a high income elasticity of demand will change more than the demand for a good with a low income elasticity of demand, at the same price. Therefore, the statement "Income elasticity of demand measures the response of the change in quantity demanded at a specific price to a change in income" is true.

Income Elasticity of Demand Measures the Response of the Change