Asked by
Octavio Ortiz
on Dec 11, 2024Verified
If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is
A) 0.5.
B) 1.0.
C) 2.0.
D) Not enough information is given to answer this question.
Income Elasticity
The percentage change in the quantity of a product demanded divided by the percentage change in consumer income that caused the change in quantity demanded. It measures the responsiveness of the demand for a good to a consumer’s change in income.
- Calculate and interpret income elasticity of demand.
Verified Answer
MS
Learning Objectives
- Calculate and interpret income elasticity of demand.