Question : The responsiveness of demand to income is defined as:
Option 1: Quantity is demanded in response to a change in income.
Option 2: Demanded quantity in response to a price change.
Option 3: Price in response to a change in income.
Option 4: Income as a result of a change in quantity demanded
Correct Answer: Quantity is demanded in response to a change in income.
Solution : The responsiveness of the quantity demanded a good or service to a change in the income of the people demanding the good is measured by the income elasticity of demand. It is calculated as the percentage change in quantity demanded divided by the percentage change in income. Option a is the correct option.
Question : The percentage change in _______ divided by the percentage change in _______ is the income elasticity of demand.
Question : The price elasticity of demand is calculated as the percentage change in:
Question : When demand is perfectly inelastic, a change in price will result in:
Question : Which of the following is a characteristic of demand elasticity?
Question : When demand is perfectly elastic, a decrease in price will result in:
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