If the Income Elasticity of Demand for Some Good Is

question 21

Multiple Choice

If the income elasticity of demand for some good is 2.4, a 10 percent increase in income results in

• A) a 240 percent decrease in quantity demanded.
• B) a 240 percent increase in the quantity demanded.
• C) a 24 percent increase in the quantity demanded.
• D) a 24 percent decrease in quantity demanded.
• E) a 2.4 percent increase in the quantity demanded.

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Definitions:

Weighted-average Shares

A calculation used in financial reporting that adjusts the number of outstanding shares for their time outstanding during the calculation period.

Retained Earnings

Earnings accumulated by a company thus far, after subtracting any dividends or distributions made to shareholders.

Price-earnings Ratio

A valuation metric for companies, representing the ratio of a company's share price to its per-share earnings.

Earnings per Share

A financial ratio indicating the proportion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.