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Author Question: What does the income elasticity of demand measure? What will be an ideal ... (Read 21 times)

Medesa

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on: Jun 29, 2018
What does the income elasticity of demand measure?
 
  What will be an ideal response?

Question 2

Why are consumers in a competitive market considered to be price takers?
 
  What will be an ideal response?


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alexanderhamilton

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The income elasticity of demand measures how the quantity demanded of a good responds to a change in income. The formula for the income elasticity of demand is the percentage change in the quantity of the good demanded divided by the percentage change in income.

Answer to Question 2

A consumer in a competitive market can buy any quantity of a good without affecting the market price, and is therefore considered to be a price taker. This is because a competitive market is characterized by many buyers and sellers and each consumer only buys a small fraction of the total quantity supplied of a good.


Medesa

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

Animal_Goddess

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Reply 3 on: Yesterday
:D TYSM

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