A Good Has an Income Elasticity of +0

question 84

Multiple Choice

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

• A)2.5 percent increase in the quantity demanded of the good.
• B)5 percent increase in the quantity demanded of the good.
• C)5 percent decrease in the quantity demanded of the good.
• D)25 percent decrease in the quantity demanded of the good.
• E)25 percent increase in the quantity demanded of the good.

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Definitions:

Transfer Program

Government policies designed to redistribute income in the society through mechanisms such as social security, grants, and subsidies to support the economically disadvantaged.

Federal Level

Pertains to the national government or the division of power between the national government and states or provinces in a federation.

Dividend Payments

Cash or stock payments made by corporations to their shareholders.

Property Income

Income from the ownership of real estate, tangible and intangible property, such as rentals, royalties, and dividends.