The Income Elasticity of Demand for Ground Beef Has Been

question 148

Multiple Choice

The income elasticity of demand for ground beef has been estimated to be -0.197.If income drops by 10 percent in a period, how will that affect demand for ground beef in that period, all other things unchanged?

• A) demand will increase by less than 1.97 percent
• B) demand will increase by 1.97 percent
• C) demand will decrease
• D) demand won't change, but quantity demanded will decrease by 1.97 percent

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Definitions:

Elastic Demand

A situation where the demand for a product is sensitive to price changes, indicating that a small change in price can lead to a significant change in the quantity demanded.

Less Elastic

Describes a situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Market Segment

A group of potential customers who share similar needs or characteristics that a company targets with its products or services.

Earn Less Profit

A scenario where a business or individual generates a lower amount of financial gain from operations or investments.