If the Income Elasticity of Demand for a Good Is

question 140

Multiple Choice

If the income elasticity of demand for a good is -2.5,then

• A)it is a normal good,and its demand curve will shift to the left if buyers' incomes increase
• B)it is a normal good,and its demand curve will shift to the right if buyers' incomes increase
• C)it is an inferior good,and its demand curve will shift to the right if buyers' incomes increase
• D)it is an inferior good,and its demand curve will shift to the left if buyers' incomes increase
• E)there is insufficient information to determine whether the good is normal or inferior

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Definitions:

Cash Flows

The comprehensive total of financial resources entering and leaving a business, significantly affecting its ability to cover immediate and short-term obligations.

Marginal Costs

The monetary cost of generating one more unit of a product or service.

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including items like lease payments, wages, and insurance fees.

Selling Price

The amount of money for which a product or service is sold to the customer, determining the revenue generated from sales.