If the Income Elasticity for a Particular Good Is 1

question 68

Multiple Choice

If the income elasticity for a particular good is 1.8, we would expect to see more of that good:

• A) consumed in low-income communities.
• B) consumed by people on higher incomes.
• C) on supermarket shelves.
• D) consumed equally by all citizens.

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Definitions:

Producer Surplus

The gap between what sellers are prepared to accept for a product or service and the real amount they end up getting.

Excess Quantity

The situation where the supply of a product exceeds the demand for it at a specific price point, leading to a surplus.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved.

Market Equilibrium

The state in which the supply and demand for a good or service are balanced, leading to a stable price.