Question: Explain the concept of "income elasticity of demand" and how it can help businesses understand consumer behavior. A) Income elasticity of demand measures how income levels affect supply and demand in the market. B) Income elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in consumer income; it helps businesses determine whether a product is a normal good, an inferior good, or a luxury good. C) Income elasticity of demand measures the impact of government policies on consumer spending. D) Income elasticity of demand has no relevance to businesses.

Question: Explain the concept of "income elasticity of demand" and how it can help businesses understand consumer behavior. A) Income elasticity of demand measures how income levels affect supply and demand in the market. B) Income elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in consumer income; it helps businesses determine whether a product is a normal good, an inferior good, or a luxury good. C) Income elasticity of demand measures the impact of government policies on consumer spending. D) Income elasticity of demand has no relevance to businesses.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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