A Good with an Income Elasticity of 2

question 5

Multiple Choice

A good with an income elasticity of 2.3 is:

• A) a luxury.
• B) inferior.
• C) a necessity.
• D) a complement.

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Definitions:

Homeostasis

The body’s tendency to maintain an equilibrium, or steady state.

Homeostasis

The self-regulating process by which biological systems maintain stability while adjusting to changing external conditions.

Yerkes-Dodson Law

The psychological principle stating that performance is best under conditions of moderate arousal rather than either low or high arousal.

Moderate Arousal

Refers to an optimal level of alertness or physical and mental activation at which performance on a task is best.