Studies Show That the Income Elasticity of Demand for Wine

question 99

Multiple Choice

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

• A) A one percent decrease in the price of wine leads to a five percent increase in wine consumption.
• B) A one percent increase in income leads to a five percent increase in wine consumption.
• C) A five percent increase in income leads to a one percent increase in wine consumption.
• D) Wine is a relatively elastic good.