The Income Elasticity of Demand for Vacations Is 5

question 84

Multiple Choice

The income elasticity of demand for vacations is 5. If incomes increase by 3 per cent next year, the quantity of vacations demanded at today's price will increase by _______ per cent.

• A) 5
• B) 15
• C) 5/3
• D) 3

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Definitions:

Equity Capital

Funds raised by a company through the issuance of shares, representing ownership interest in the company.

Share Price

The current market price of a company's share, reflecting its perceived value by investors.

Book Value

The net value of a company's assets less its liabilities and intangible assets.

Abnormal Earnings

Profits that exceed or fall below what is typically expected, often due to unusual events or one-time gains and losses.