Day: December 12, 2017

Economics Multiple Choice Question – 12 December 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

If the Income Elasticity of Demand is +2 and income rises by 10%, what will happen to sales?

Select ONE answer:

  1. Rise by 5%
  2. Decrease by 5%
  3. Rise by 20%
  4. Fall by 20%
  5. Stay the same

Explain with a real-life example what is meant by an income-elastic product:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3 – The formula for calculating income elasticity of demand is the percent change in quantity demanded divided by the percent change in income. So if income goes up by 10% and YED is 2 then the % Change in QD will be 10% * 2 = 20%

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