A measurement showing how quantity demanded varies with income is the ?
Correct answer: D. income elasticity of demand
- A. Price elasticity of demand
- B. Cross-price elasticity of demand
- C. budget elasticity of demand
- D. income elasticity of demand
Explanation
Income elasticity of demand measures the percentage change in quantity demanded caused by a percentage change in income. Price elasticity concerns the good's own price, while cross-price elasticity concerns another good's price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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