When income rises by 2 percent and other things remain the s

When income rises by 2 percent and other things remain the same, the quantity demanded of good C increases by 3 percent. Good C is good and income rises, the demand for good C

Solution

Good C is a normal good and income rises, the demand for good C increases.

Option “C” is correct. In case of normal good, quantity demand increases as the consumer income increases.

Income elasticity of demand = (% change in quantity demand) / (% change in income)

                                               = 3 / 2

                                               = 1.5 (Answer)