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Consulting Case Interview Practice Questions

Category - Strategy

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Which of the following is a measure of how demand for a good changes with people’s income?

Price elasticity of demand
Income elasticity of demand
CPI
Michigan Index
Marginal Cost

Explanation

Answer: B - The income elasticity of demand measures how much the quantity demanded changes as income increases or decreases. Luxury goods are highly income elastic, while staples such as basic food and clothing or less income elastic.

Key Takeaway: Understanding how a good is treated by consumers in a dynamic economy will be a key to success in many cases.

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Consulting Case Interview Practice Questions

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