The elasticity that measures the responsiveness of consumer demand to changes in income is the: a

Economics Dec 23, 2020

The elasticity that measures the responsiveness of consumer demand to changes in income is the:

a. Income elasticity,

b. Own price elasticity,

c. Cross-price elasticity,

d. Neither the income elasticity, the own-price elasticity, nor the cross-price elasticity.

Expert Solution

Option a. Income elasticity is correct.

The income elasticity of an item tells the level with which the demand of the item rises when the person who is demanding that item, experiences a change in his/her income. This kind of elasticity indicates if an item is normal or inferior.

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