Which of the Following Is Most Likely to Have an Income

question 122

Multiple Choice

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

• A) Food
• B) Telephone services
• C) Airline travel
• D) Alcoholic beverages
• E) Tobacco

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at a given overall price level and in a given time period.

Labor Productivity

Labor productivity measures the output of goods and services produced by labor per unit of time, often assessed to evaluate the efficiency of a workforce.

Velocity of Money

The rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period of time.

Classical Assumption

In economics, refers to the traditional ideas that free markets function under equilibrium with full employment and price flexibility.