If Income Elasticity of Demand for Food Is 1

question 102

Multiple Choice

If income elasticity of demand for food is 1.75 it follows that

• A) a 10 percent rise in the price of food lowers the quantity demanded of food by 17.5 percent.
• B) if income rises by 10 percent, consumption of food rises by 17.5 percent.
• C) if income rises by 10 percent, consumption of food falls by 17.5 percent.
• D) a 1 percent rise in the price of food decreases the quantity demanded of food by 1.75 percent.
• E) none of the above