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    Question

    What does unitary income elasticity of demand (Ei=1)

    imply?
    A An increase in income leads to a decrease in quantity demanded Correct Answer Incorrect Answer
    B An increase in income leads to an equal increase in quantity demanded Correct Answer Incorrect Answer
    C A decrease in income leads to an equal decrease in quantity demanded Correct Answer Incorrect Answer
    D A decrease in income leads to a greater decrease in quantity demanded Correct Answer Incorrect Answer

    Solution

    Unitary income elasticity of demand (Ei=1) implies that a given proportionate rise in the consumer's money income is accompanied by an equally proportionate rise in the quantity demanded of a commodity, and vice versa.

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