ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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YED measures the degree of responsiveness of quantity demanded for a good to a change in consumer’s income, ceteris paribus
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YED measures the degree of responsiveness of demand for a good to a change in consumer’s income, ceteris paribus
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YED measures the degree of responsiveness of consumer’s income to a change in quantity demanded for a good, ceteris paribus
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YED measures the degree of responsiveness of consumer’s income to a change in demand for a good, ceteris paribus
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Detailed explanation-1: -The income elasticity of demand (YED) for a good is a measure of the degree of responsiveness of the demand to a change in income, ceteris paribus. The YED for a good is calculated by dividing the percentage change in the demand by the percentage change in income.
Detailed explanation-2: -Income Elasticity of Demand (YED) is defined as the responsiveness of demand when a consumer’s income changes. It is defined as the ratio of the change in quantity demanded over the change in income. The higher the income elasticity, the more sensitive demand for a good is to changes in income.
Detailed explanation-3: -Income elasticity of demand measures the responsiveness of demand for a particular good to changes in consumer income. The higher the income elasticity of demand for a particular good, the more demand for that good is tied to fluctuations in consumers’ income.
Detailed explanation-4: -Income elasticity of demand denotes the responsiveness to change in consumers’ income with the change in the demand for a certain good. For a certain product, the income elasticity of demand can be positive or negative, or non-responsive.
Detailed explanation-5: -The income elasticity of demand is a measure of the sensitivity of the quantity demanded to changes in real income. N.B. In economics the abbreviation of Income is ‘Y’. This is because ‘I’ is used for Investment.