If the Income Elasticity of Demand for Lobster Is +1

question 9

True/False

If the income elasticity of demand for lobster is +1.5, a 5 percent increase in income will cause a 7.5 percent increase in the demand for lobster.

---

Definitions:

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.