For a Product with an Income Elasticity Greater Than One

question 94

Multiple Choice

For a product with an income elasticity greater than one, a price increase will cause the consumer's real income to

• A) rise and the quantity purchased to fall.
• B) fall and the quantity purchased to rise.
• C) fall and the quantity purchased to fall.
• D) remain constant.
• E) rise and the quantity purchased to rise.

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Definitions:

Useful Life

The estimated period over which it is expected that an asset will be profitable or useful to its owner.

Units-Of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on its actual usage or activity level.

Factory Machinery

Refers to the physical equipment used in the production process within a manufacturing facility.

Delivery Equipment

Assets such as trucks and vans that are used by a business to transport products to customers.