Suppose That the Income Elasticity of Demand for Good X

question 91

Multiple Choice

Suppose that the income elasticity of demand for good X is greater than 1. Other things being equal, which of the following statements is INCORRECT?

• A) Good X is a normal good.
• B) The quantity demanded of good X decreases as a consumer's income declines.
• C) A consumer buys more X as income rises, but the share of income spent on good X falls.
• D) A consumer buys more X as income rises and the share of income spent on good X also rises.

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Definitions:

Criterion-related

Pertains to a method of evaluating the validity of a test by comparing its results with an external criterion.

Contexts

The circumstances or environments in which events occur, affecting their understanding and interpretation.

Generalizable

A quality of research findings or data that allows conclusions to be extended from the sample studied to larger populations or other contexts.

Concurrent

Occurring or happening simultaneously.