Suppose That the Income Elasticity of Demand for Good X

question 259

Multiple Choice

Suppose that the income elasticity of demand for good X is positive but less than 1. Other things being equal, which of the following statements is INCORRECT?

• A) Good X is a normal good.
• B) The quantity demanded of good X decreases as a consumer's income declines.
• C) A consumer buys more X as income rises, but the share of income spent on good X falls.
• D) A consumer buys more X as income rises and the share of income spent on good X also rises.

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