Business, 30.11.2019 03:31 hendo617

Over time, technological advance increases consumers’ incomes and reduces the price of smartphones. each of these forces increases the amount consumers spend on smartphones if the income elasticity of demand is greater than and if the price elasticity of demand is greater than
a. zero, zero
b. zero, one
c. one, zero
d. one, one.

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Answer from: greciakawaii

The correct answer is b. zero, one

Explanation:

Given an increase in the income of consumers, they usually increase their amount consumed, and vice versa. The income elasticity of demand measures the proportion of the increase in the consumption of a product before a proportional change in income.

Elasticity Demand income = Proportional variation in the amount consumed of a product / Proportional variation in consumer income.

Price elasticity of demand (EPD, PED, Ep or Ed) is a measure used in economics to show the degree of response, or elasticity, of the quantity demanded of a good or service to changes in the price of said good or service. It grants the percentage change of the quantity demanded in relation to a unit percentage change in the price, considering that the rest of the determinants of the demand, such as income, remain constant (ceteris paribus). It was conceived by English economist Alfred Marshall.

Price elasticities are almost always negative, although analysts tend to ignore the sign, although this may lead to ambiguities. Only goods that do not conform to the law of demand, such as Veblen or Giffen, have a positive EPD. In general, the demand for a good is considered inelastic (or relatively inelastic) when the EPD is less than one (in its absolute value); This happens when changes in the price have a relatively small effect on the quantity demanded of the good. The demand for a good is considered elastic (or relatively elastic) when its EPD is greater than one (again, in its absolute value); that is, when changes in the price have a relatively large effect on the quantity of the demanded good.

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