When Consumers' Incomes Decline During a Recession, They Increase Their

question 93

Multiple Choice

When consumers' incomes decline during a recession, they increase their consumption of instant coffee and reduce their consumption of other beverages. Therefore, instant coffee:

• A) is a necessity.
• B) has a negative income elasticity of demand.
• C) has an income elasticity of demand greater than zero but less than one.
• D) is a normal good.

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Definitions:

Banded Iron Formations

Sedimentary rocks consisting of alternating layers of iron-rich minerals and silica, significant as a source of iron and as evidence of Earth's oxygenation.

Sedimentary Rocks

Rocks formed by the accumulation and consolidation of sediment, especially fragments of rocks, minerals, and organic matter.

Magnetite

A magnetic mineral form of iron oxide, often used as an iron ore or in magnetic applications.

Hematite

An iron oxide mineral, often reddish-brown, used as an ore of iron and in various industrial and artistic applications.