The Income Elasticity of Demand Is a Measure of the Responsiveness

question 199

Multiple Choice

The income elasticity of demand is a measure of the responsiveness of the

• A) quantity of a good demanded to changes in income.
• B) consumer's income to a change in the price of the goods he or she consumes.
• C) quantity of a good demanded to changes in its price.
• D) quantity of a good demanded to changes in another good's price.

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Definitions:

Marginal Cost (MC)

The increase in total cost that results from producing 1 more unit of output. Marginal costs reflect changes in variable costs.

Marginal Cost

The financial increment incurred by the production of an extra unit of a product or service.

Average Total Cost

It refers to the total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.

Efficient Mix

An allocation of resources that maximizes the total utility to society, where no individual can be made better off without making someone else worse off.