An income elasticity (E_y)of 2.0 indicates that for a ____ increase in income,____ will increase by ____. A) one percent; quantity supplied; two units B) one unit; quantity supplied; two units C) one percent; quantity demanded; two percent D) one unit; quantity demanded; two units E) ten percent; quantity supplied; two percent

Question

Quizplus · Accepted Answer

Income elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in income, with all other factors being constant. An elasticity of 2.0 means that for a one percent increase in income, the quantity demanded will increase by two percent.

An Income Elasticity (Ey)of 2

An Income Elasticity (E_y)of 2