Income Elasticity of Demand Measures How

question 80

Multiple Choice

Income elasticity of demand measures how

• A)the quantity demanded changes as consumer income changes.
• B)consumer purchasing power is affected by a change in the price of a good.
• C)the price of a good is affected when there is a change in consumer income.
• D)many units of a good a consumer can buy given a certain income level.

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Vary Supply

Adjusting the quantity of products produced or available to meet fluctuating demand in order to optimize inventory levels and minimize waste.

Price Promotions

Temporary reductions in the selling price of goods or services aimed at increasing demand and boosting sales volumes.

Production Capacity

The maximum amount of work or products a facility can produce over a given time period, crucial for planning and meeting demand.