If the percentage change in the income of the consumers of an industrial product is less than the resulting percentage change in the quantity demanded of the product, then the income elasticity of demand for the product is?
a
less than one
b
equal to one
c
greater than one
d
equal to zero
Explanation
Correct Option
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Micahbright
11 years ago
hey... Hold it! Co-efficient of income elasticity is %change in qty demanded / %change in income. So if the %change in income is less than the resulting %change in qty, income elasticity is greater than 1 which makes it elastic.
