If you buy 10% more compact discs in response to a 20% increase in income,your income elasticity for compact discs is _____.

A) 0.5
B) 1.0
C) 2.0
D) 0.0

Question

If you buy 10% more compact discs in response to a 20% increase in income,your income elasticity for compact discs is _____.A) 0.5B) 1.0C) 2.0D) 0.0

Zybrea Knight · Accepted Answer

Final Answer : A, Explanation :  Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it's (10%/20%) = 0.5.

If you buy 10% more compact discs in response to a 20% increase in income,your income elasticity for compact discs is _____.

A) 0.5
B) 1.0
C) 2.0
D) 0.0

Definitions

Learning Objectives

Learning Objectives

Related questions