Question

If the percentage change in quantity demanded of a good is less than the percentage change in buyer's income, then the good is said to be:

Answer 1

Answer: Income Inelastic.

Step-by-step explanation:

Income elasticity of demand refers to the responsiveness of demand when there is a certain change in consumer's income.

Income inelastic refers to the situation in which demand is less responsive to the change in consumer's income. Suppose that income decreases by 10%, then as a result demand decreases by 5%. Here, demand does not fall significantly with a fall in income.