Which of the following is commonly considered alongside income as a measure of wealth when analyzing income elasticity of demand?

• A. Price level
• B. Expenditure
• C. Quantity demanded
• D. Assets

Answer: (D)

Verified step by step guidance

1. Understand that income elasticity of demand measures how the quantity demanded of a good responds to changes in consumer income.
2. Recognize that when analyzing income elasticity, economists often consider not just current income but also the overall wealth of consumers, which includes their assets.
3. Recall that assets represent accumulated wealth such as savings, property, and investments, which can influence consumer spending behavior beyond just current income.
4. Note that price level, expenditure, and quantity demanded are related economic variables but are not typically used as direct measures of wealth alongside income in this context.
5. Therefore, when analyzing income elasticity of demand, assets are commonly considered alongside income as a measure of wealth to better understand consumer demand patterns.