The Income Elasticity of Demand Is ________ If the Good

question 5

Multiple Choice

The income elasticity of demand is ________ if the good is ________ good.

• A) positive; a substitute
• B) positive; an inferior
• C) less than one; an inferior
• D) negative; a normal
• E) positive; a normal

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Definitions:

Inelastic

A characteristic of goods whereby a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Total-revenue Test

A method used to determine the price elasticity of demand by observing changes in total revenue as a result of price alterations.

Demand

The volume of a commodity or service that buyers intend and can afford to buy across a range of prices over a set time frame.