Answered: A 10 percent decrease in income…

A 10 percent decrease in income decreases the quantity demanded of CDs by 3 percent. The income elasticity of demand for CDs is Select one: O a. -0.3 O b. 0.3 O c. 3.3 O d. 10

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 8SCQ: The avenge annual income rises from 25,000 to 33,000, and the quantity of bleed consumed in a year...

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Concept explainers

Elasticity of Demand and Supply

The elasticity of demand and supply are two important concepts of microeconomics. The elasticity of demand measures the responsiveness of consumers’ demands to the price change, changes in income of consumers, and changes in the price of the related goods. Similarly, the elasticity of supply refers to the proportionate change in the quantity supplied due to the proportionate change in the price. In other words, it can be said that elasticity of supply measures how the quantity of supply changes when the price changes of that particular product.

Question

A 10 percent decrease in income decreases the quantity demanded of CDs by 3
percent. The income elasticity of demand for CDs is
Select one:
O a. -0.3
O b. 0.3
O c.
3.3
O d. 10

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