If a 10 Percent Increase in Income Results in an 8

question 60

Multiple Choice

If a 10 percent increase in income results in an 8 percent increase in the quantity demanded of a good, the income elasticity of demand equals ________ and the good is ________ good.

• A) 0.80; an inferior
• B) 1.2; a normal
• C) 0.80; a normal
• D) -1.2; an inferior

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Definitions:

Subscription Price

The cost that a customer pays, often on a regular basis, to receive a product or service.

Common Share Price

The price at which a corporation's common shares are bought and sold on the stock market.

Rights-On Period

A defined timeframe during which shareholders can purchase additional shares before the public.

Dutch Auction

A type of auction where the auctioneer starts with a high asking price and lowers it until a participant is willing to accept the auctioneer's price, or a predetermined minimum price is reached.