If a Product's Income Elasticity of Demand Is - 1

question 75

Multiple Choice

If a product's income elasticity of demand is - 1.7, then we can conclude that

• A) the product is certainly a necessity.
• B) a decrease in income will lead to an increase in demand for the product.
• C) an increase in income will lead to an increase in demand for the product.
• D) the product is a normal good.
• E) the product is a luxury good.

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Definitions:

Supply of Loanable Funds

The total amount of funds that lenders are willing to loan at a given interest rate in an economy.

Elastic

Describes a situation in economics where the quantity demanded or supplied of a good changes significantly in response to changes in its price.

Demand for Land

The desire or need by individuals or businesses to purchase or lease land for various uses such as agriculture, commercial, or residential purposes.

Supply of Land

The total land area that is available for a particular use, such as agriculture, industry, or housing, which is often fixed and inelastic in the short term.