Income elasticity refers to: a

Economics Dec 08, 2020

Income elasticity refers to:

a. Percentage change in quantity demanded divided by the percentage change in price,

b. Movement down along a demand curve,

c. Movement up along a demand curve,

d. Horizontal shift of a demand curve,

e. Vertical shift of a demand curve.

Expert Solution

The answer is d. Horizontal shift of a demand curve.

This is because the Income elasticity measures how the Demand Curve changes as a result of changes in income levels (i.e. Percentage change in quantity demanded divided by the percentage change in income).

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