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Elastic and Inelastic Demand

Which of the ...

Question

Which of the following defines income elasticity of demand?

A

Change in the price of commodity

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B

Proportion of income change

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C

Percentage change in quantity demanded to percentage change, in income

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D

Consumers income change

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Solution

The correct option is C Percentage change in quantity demanded to percentage change, in income
Income e elasticity of demand is the ratio of a relative change in quantity to a relative change in income. It measures the responsiveness of the demand to the change in income.

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