ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the quantity demanded changes as consumer income changes.
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consumer purchasing power is affected by a change in the price of a good.
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the price of a good is affected when there is a change in consumerincome.
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many units of a good a consumer can buy given a certain income level.
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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: -Income elasticity of demand measures the relationship between the consumer’s income and the demand for a certain good. It may be positive or negative, or even non-responsive for a certain product. The consumer’s income and a product’s demand are directly linked to each other, dissimilar to the price-demand equation.
Detailed explanation-3: -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.
Detailed explanation-4: -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-5: -Changes in real income can result from nominal income changes, price changes, or currency fluctuations. When nominal income increases without any change to prices, this means consumers can purchase more goods at the same price, and for most goods, consumers will demand more.