If a Consumer Increases Her Quantity of Ice Cream Consumed

question 45

Multiple Choice

If a consumer increases her quantity of ice cream consumed by 100% when her income rises by 25%, then her income elasticity of demand for ice cream is

• A)8.0
• B)4.0
• C)0.25
• D)0.08

---

Definitions:

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and loan payments.

Marginal Cost

The monetary outlay for producing an additional unit of a good or service.

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or sales, such as rent and salaries.

Average Total Cost Curve

A graph that shows the per unit cost of production at various levels of output.