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Question about Income Elasticity

An income elasticity (Ey) 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

Solution Preview

The answer will be C). because:

The income elasticity of demand (YED) measures the responsiveness of a change in the quantity demanded to a ...

Solution Summary

Income elasticity

$2.19