Income elasticity of demand measures how ___________________.
A)responsive the quantity of one good demanded to a change in the price of another good
B)the consumption of various goods and services respond to change in income
C)the quantity demanded responds to a change in price
D)responsive the quantity supplied is to a change in price

Question

Quizplus · Accepted Answer

Income elasticity of demand is a measure of how much the quantity demanded of a good or service changes in response to a change in income of the consumer, holding all other determinants of demand constant. Therefore, option B is the correct choice as it describes this concept accurately. Option A describes cross-price elasticity of demand, option C describes price elasticity of demand, and option D describes elasticity of supply.

Income Elasticity of Demand Measures How ___________________