When we measure the responsiveness of consumer purchases to changes in consumer income, we are measuring:

A. Price elasticity of supply

B. Cross-price elasticity of demand

C. Coefficient of income elasticity

D. Income elasticity of demand

The correct answer is D.) Income elasticity of demand

• The income elasticity of demand is the measure of how the quantity demanded changes as consumer income changes. If the income elasticity is positive, then we say that the product is normal and if it is negative, we say that the item is an inferior good.

-Price elasticity of supply: shows how much the quantity supplied will respond to the changes in the cost of those goods.

-Cross-price elasticity of demand: measure how the quantity demanded of a product will respond to change in the price of another item.