If the Income Elasticity of Demand for a Good Is

question 103

Multiple Choice

If the income elasticity of demand for a good is 1.25, a 10 percent increase in income results in

• A) a 12.5 percent decrease in the quantity demanded.
• B) a 125 percent increase in the quantity demanded.
• C) a 12.5 percent increase in the quantity demanded.
• D) a decrease in quantity demanded.
• E) not enough information to answer this question.

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Definitions:

Salaries Payable

A liability account representing amounts owed to employees for work performed and not yet paid.

Debit Postings

Entries made on the left side of an account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or revenue.

Credit Postings

Entries made in the accounts to record increases in liabilities, revenues, or owner's equity and decreases in assets or expenses.

Owner Investment

Capital contributions made by the owner(s) or shareholders into a business, either in cash or other assets, for the purpose of funding operations or expansion.