If the Income Elasticity of Demand for Corn Is 0

question 424

Multiple Choice

If the income elasticity of demand for corn is 0.5, then as income increases

• A) the demand for corn will increase.
• B) the demand for corn will decrease.
• C) corn will prove to be an inferior good.
• D) the supply curve of corn will shift leftward.

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Definitions:

Substitution Effect

refers to the change in consumption patterns due to a change in relative prices, leading consumers to substitute more expensive goods with cheaper alternatives.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household within a specified period.

Demand Change

Variations in the quantity of a product that consumers are willing and able to purchase at various price levels over a period.

First Class

Describes the highest quality or most expensive service, accommodation, or means of transportation available.