Studies Show That the Income Elasticity of Demand for Wine

question 242

Multiple Choice

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

• A)A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption.
• B)A 1 percent increase in income leads to a 5 percent increase in wine consumption.
• C)A 5 percent increase in income leads to a 1 percent increase in wine consumption.
• D)Wine is a relatively elastic good.

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Definitions:

Aphasia

A disorder caused by damage to parts of the brain responsible for language, affecting speaking, reading, writing, or understanding language.

Prefrontal Cortex

The front part of the frontal lobes of the brain, involved in complex cognitive behavior, personality expression, decision making, and moderating social behavior.

Executive Functioning

A set of cognitive processes including working memory, flexible thinking, and self-control, that are necessary for managing oneself and one's resources to achieve a goal.

Forebrain

refers to the anterior part of the brain, including the cerebral hemispheres, thalamus, and hypothalamus, responsible for complex behaviors and functions.