The Difference Between Price Elasticity of Demand and Income Elasticity

question 311

Multiple Choice

The difference between price elasticity of demand and income elasticity of demand is that

• A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes.
• B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve.
• C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price.
• D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.

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Definitions:

Stocks and Bonds

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Private Enterprise

Private enterprise is a business or industry that is managed and owned by private individuals or companies rather than by the state.

Production Possibility Frontier

A diagram demonstrating all possible maximal production outcomes for two commodities, subject to a combination of resources and various factors.

Bowed In

Describes a curve that is concave towards the origin, indicating increased efficiency or utility in some economics models.