why-is-the-percentage-change-in-quantity-demanded-divided-by-the-percentage-chan

Question

Why is the percentage change in quantity demanded divided by the percentage change in income significant in the income elasticity formula?

Accepted Answer

It shows the responsiveness of demand to income changes.

Answer

It assesses the impact of advertising on demand.

Answer

It indicates the price sensitivity of consumers.

Answer

It measures the supply response to price changes.