Suppose the Value of Income Elasticity of Demand for a Private

question 9

Multiple Choice

Suppose the value of income elasticity of demand for a private college education is equal to 1.5. This means that:

• A) every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education.
• B) a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.
• C) a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased.
• D) a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased.

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Definitions:

Self-actualization

Fulfilling one's capabilities and realizing personal potential, regarded as an essential urge or demand within each person.

Abraham Maslow

A psychologist best known for creating Maslow's hierarchy of needs, a theory in psychology about human motivation based on prioritized needs.

Belonging

The feeling of being accepted and included within a group or community, contributing to a person's sense of identity and emotional well-being.

Maslow

Abraham Maslow was an American psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.