Chris Buys More New Jewelry When Her Income Rises

question 106

Multiple Choice

Chris buys more new jewelry when her income rises.This means that for Chris,

• A) new jewelry is an inferior good.
• B) the income elasticity of demand for new jewelry is positive.
• C) the income elasticity of demand for new jewelry is negative.
• D) none of the above

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Definitions:

Automatic System

A cognitive system that operates quickly and without conscious effort, responsible for fast and intuitive reactions and judgements.

Conscious System

Refers to the parts of the mind that are aware of surroundings, thoughts, and feelings at any given moment.

Planning Fallacy

The tendency for plans to be overly optimistic because the planner fails to allow for unexpected problems.

Overly Optimistic

Describes a tendency to hold a rosier outlook than reality might support, often resulting in unrealistic expectations.