Correct option - a
Negative income elasticity means the good is an inferior good.
If a product's income elasticity of demand is -1.7, then we can conclude that Select one:...
1. For _____ goods, income elasticity is positive. Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. a. normal b. necessity c. luxury d. inferior 2. If a good has an income elasticity of 1.83, then it: a. probably has a lot of close substitutes available. b. is an inferior good, and a necessity. c. is a normal good, and a...
When the income elasticity of demand for a good is negative, one can correctly conclude that: total revenue will decrease when the price increases. the good is a substitute. the good is a complement. the good is a normal good. the good is an inferior good. As the price is raised along a straight-line demand curve, the demand curve becomes more elastic. True False Income elasticity of demand is expected to be _____. relatively high for necessities relatively low for...
Which of the following is not a determinant of a good’s price elasticity of demand? Select one: a. The slope of the demand curve b. The share of the good in the consumer’s total budget c. Whether the good is a luxury or a necessity d. The passage of time
The price elasticity of demand measures 0.4. Which of the following statements is correct? Choose one: a. The product in question is a substitute. b. The product in question is a luxury product. c. This is unit elasticity. d. The product in question is a necessity. e. The product in question is inferior good.
If the income elasticity of demand (Em) for a good is .76, a 10% increase in income Select one: a. results in a .076% decrease in consumption of this good. b. results in a 7.6% increase in consumption of this good. c. results in a 76% increase in consumption of this good. d. results in a .76% decrease in consumption of this good.
Economists estimated that the price elasticity of beer is -0.23 and the income elasticity of beer is -0.09. This means that A) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. B) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. C) an increase in the price of beer will increase the...
Income elasticity of demand Calculate the income elasticity of demand for the following demand functions and assess its magnitude (is the good normal, inferior, a luxury or a necessity?). Q =50 -10p + 3Y, at p = 2 and Y = 20 Q = 5 - 20p + 4Y, at p = 1 and Y = 50 Q = 70 – 3p – 2Y, at p = 15 and Y = 5 Q = 35 - 20p + 0.5Y, at...
If the income elasticity of demand for a good is -1.5 that good is A. A substitute to another good. B. A complement to another good. C. A normal good. D. An inferior good. E. A necessity good.
4. (a) A product has a price elasticity of demand equal to -2. If price increases by 6 percent, what will be the decrease in quantity demanded? (b) Is this product most likely a luxury or necessity, and why? (c) Another product has an income elasticity of 0.8. If income rises by 8 percent, what will be the increase in demand? (d) Two products have a cross price elasticity of -0.4. Are these product substitutes or complements. (e) Yet another...
7. Using the income elasticity of demand to characterize good:s Data collected from the economy of Cardtown reveals that an 18% decrease in income leads to the following changes: ·A 6% decrease in the quantity of flops demanded ·A 17% increase in the quantity of clubs demanded A 29% decrease in the quantity of houses demanded Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then,...