The Income Elasticity of Demand of a Normal Good Is

question 190

Multiple Choice

The income elasticity of demand of a normal good is:

• A) between -1 and 0.
• B) less than 0.
• C) equal to 0.
• D) greater than 0.

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Definitions:

Surplus

The situation in which the quantity of a good or service supplied exceeds the quantity demanded at the existing price.

Price Ceiling

A price ceiling is a legal maximum price set by the government for certain goods or services to prevent prices from becoming prohibitively high.

Price Floor

A government-imposed minimum price charged on a product, below which that particular product cannot be supplied to the market.

Shortage

A scenario in which the market's need for a service or product surpasses its availability.