If a 5% Increase in Income Increases Quantity Demanded by 4

question 130

Multiple Choice

If a 5% increase in income increases quantity demanded by 4%, the income elasticity of demand is:

• A) 1.25.
• B) 0.80.
• C) 2.0.
• D) 0.02.

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Definitions:

Margin of Error

A measure of the range of values below and above the sample statistic in a confidence interval.

Sample Mean

The average value of a sample set of numbers, estimated from a subset of a population.

Margin of Error

Represents the maximum amount by which the sample results are expected to differ from the actual population parameter.

T Distribution

A probability distribution used in statistics for hypothesis testing, especially with small sample sizes or unknown population standard deviations.