Suppose Good X Has a Positive Income Elasticity of Demand

question 234

Multiple Choice

Suppose good X has a positive income elasticity of demand.This implies that good X could be
(i) A normal good.
(ii) A necessity.
(iii) An inferior good.
(iv) A luxury.

• A)(i)only
• B)(i)and (ii)only
• C)(i), (ii),and (iv)only
• D)(iii)only

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Definitions:

Net Income

The final amount of profit a company makes after subtracting costs, taxes, and expenses from its gross revenue.

Fair Value

An estimated market value of an asset or liability based on current market prices or valuations.

Stock Investments

The purchase of shares in a company with the expectation of generating income or capital gains.

Insignificant Influence

Refers to a situation in which an investor does not have enough stake or power in an investee company to affect its decisions or policies.