Studies Show That the Income Elasticity of Demand for Wine

question 212

Multiple Choice

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that

• A)wine and spirits are luxury goods.
• B)wine is a luxury good and spirits are inferior goods.
• C)wine and spirits are highly price elastic.
• D)wine is a luxury good and spirits are necessities.

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Definitions:

Third World Liberation Front

A coalition of ethnic student groups that formed in the late 1960s in the United States to demand university curriculum reforms and the establishment of ethnic studies programs.

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An ideological belief that white people are superior to those of all other races, particularly the black race, and should therefore dominate society.

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