Suppose the Income Elasticity of Demand for a Private College

question 17

Multiple Choice

Suppose the income elasticity of demand for a private college education is equal to 1.5.This means that

• A)every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education
• B)every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education
• C)a 10 percent increase in income causes a 15 percent increase in the demand for a private college education
• D)a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
• E)a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent

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