For a Product with an Income Elasticity Greater Than One

question 94

Multiple Choice

For a product with an income elasticity greater than one, a price increase will cause the consumer's real income to

• A) rise and the quantity purchased to fall.
• B) fall and the quantity purchased to rise.
• C) fall and the quantity purchased to fall.
• D) remain constant.
• E) rise and the quantity purchased to rise.

---

Definitions:

First-Order Model

A mathematical model that describes a system using a first-degree differential equation, which relates system output to inputs and internal states with only the first derivative of time.

Predictor Variables

Variables in statistical models that are used to predict the outcome of a response variable.

Predictor Variables

Variables used in statistical models to predict or affect the outcomes of a dependent variable.

Linearly Related

Describes two variables that change at a consistent rate relative to one another.