If When Income Increases by 2 Percent and the Price

question 501

Multiple Choice

If when income increases by 2 percent and the price does NOT change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is

• A) 0.33.
• B) 0.
• C) negative.
• D) 3.00.

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Definitions:

Actual Return

The real gain or loss achieved on an investment over a specific period, including interest, dividends, and capital gains.

Expected Return

The anticipated amount of profit or loss one expects from an investment over a specified period, considering all potential outcomes.

Service Cost

The portion of the cost of a pension or other post-employment benefit plan attributed to services rendered by employees in the current period.

Discounted Present Value

The process of determining the present value of a future amount of money or stream of cash flows given a specified rate of return.