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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Definitions:

Significant Change

A statistically important difference or alteration between two or more variables or sets, indicating a divergence beyond random variations.

Marascuilo Procedure

The Marascuilo Procedure is a statistical method used to simultaneously compare proportions among multiple groups to identify significant differences.

Uniform Distribution

A distribution in which all outcomes are equally likely; a flat distribution where every value has the same probability.

Expected Frequency

The theoretical number of times an outcome is anticipated to occur in a statistical experiment based on the total number of observations and the probabilities of outcomes.