Understanding Income Elasticity of Demand Quiz
Explore elasticity concepts with 12 questions. Measure your knowledge on positive, negative, and zero income elasticity of demand.
#1
What does income elasticity of demand measure?
The change in quantity demanded in response to a change in income
The change in quantity supplied in response to a change in income
The change in price in response to a change in income
The change in demand in response to a change in price
#2
If a good has an income elasticity of demand of 0.5, it is considered to be:
A normal good
An inferior good
A luxury good
A complementary good
#3
Which of the following scenarios indicates a positive income elasticity of demand?
The demand for movie tickets decreases as income decreases
The demand for generic brand clothing increases as income decreases
The demand for luxury cars increases as income increases
The demand for fast food decreases as income increases
#4
If a good has an income elasticity of demand greater than 1, it is considered to be:
A normal good
An inferior good
A luxury good
An essential good
#5
What is the formula to calculate income elasticity of demand?
Income elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in income)
Income elasticity of demand = (Percentage change in income) / (Percentage change in quantity demanded)
Income elasticity of demand = (Change in quantity demanded) / (Change in income)
Income elasticity of demand = (Change in income) / (Change in quantity demanded)
#6
Which of the following goods is most likely to have a positive income elasticity of demand?
Rice
Luxury cars
Generic medication
Salt
#7
If a good has an income elasticity of demand of -0.3, what does it imply?
It is a normal good
It is a luxury good
It is an inferior good
It is a substitute good
#8
What does it mean if a good has a negative income elasticity of demand?
The good is a normal good
The good is an inferior good
The good is a luxury good
The good is a substitute good
#9
If the income elasticity of demand for a product is 0, what type of good is it?
Normal good
Inferior good
Luxury good
Unitary elastic good
#10
Which of the following goods is likely to have an income elasticity of demand close to zero?
Smartphones
Health insurance
Designer clothing
Organic food
#11
What does it mean if the income elasticity of demand for a good is greater than 1?
The good is a necessity
The good is a luxury
The good is an inferior good
The good is a normal good
#12
What does it mean if the income elasticity of demand for a good is negative?
The good is a normal good
The good is an inferior good
The good is a luxury good
The good is a substitute good
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