ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how a good’s quantity demanded responds to change in the goods price.
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how a good’s quantity demanded responds to change in the price of another good.
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how a good’s quantity demanded responds to change in buyers’ incomes.
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how a good’s quantity demanded responds to producers’ incomes.
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Detailed explanation-1: -Income elasticity of demand is an economic measure of how responsive the quantity demanded for a good or service is to a change in income. The formula for calculating income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income.
Detailed explanation-2: -The income elasticity of demand measures how much the quantity demanded responds to changes in consumers’ income. The cross-price elasticity of demand measures how much the quantity demanded of one good responds to the price of another good.
Detailed explanation-3: -Income elasticity of demand measures how much the quantity demanded of a good responds to a change in consumers’ income. It is computed as the percentage change in the quantity demanded divided by the percentage change in income.
Detailed explanation-4: -The income elasticity of demand reflects the responsiveness of demand to changes in income. It is the percentage change in quantity demanded at a specific price divided by the percentage change in income, ceteris paribus. Income elasticity is positive for normal goods and negative for inferior goods.
Detailed explanation-5: -2). The Income Elasticity of Demand, commonly known as YED, refers to the sensitivity of the quantity requested for a certain commodity to changes in real income (the income generated by a person after accounting for inflation) of the consumers who buy this good, while all other variables remain constant.