The Income Elasticity of Demand for Peaches Has Been Estimated

question 122

Multiple Choice

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15 percent in a period, how will that affect total expenditures on peaches in that period, all other things unchanged?

• A) total expenditures will rise
• B) total expenditures will fall
• C) total expenditures will remain unchanged
• D) not enough information is given to answer the question

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Definitions:

Cash

Money in the form of physical currency, such as banknotes and coins, which can be used immediately for transactions.

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Cheques written with a future date, not valid or actionable until that date, often used to ensure future payments.

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