Question

Rank the following four goods from lowest income elasticity of demand (1) to highest income elasticity of demand (4) a. Bread
Rank the following four goods from lowest income elasticity of demand (1) to highest income elasticity of demand (4) a. Bread
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Answer #1

Bread will be lowest income elastic because that is a necessity good, it will be followed by Pepsi as the consumption of soda will increase with increase in the income.

Laptop will be at third rank and highest income elasticity will be for Mercedes benz.

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