Suppose That the Income Elasticity of Demand for Peanut Butter

question 157

Multiple Choice

Suppose that the income elasticity of demand for peanut butter is 0.75. Which of the following is true?

• A) Peanut butter is a normal good, because income elasticity is positive.
• B) Peanut butter is an inferior good, because income elasticity is positive.
• C) Peanut butter is a normal good, because income elasticity is less than 1.
• D) Peanut butter is an inferior good, because income elasticity is less than 1.

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Definitions:

Level Of Service

Describes the degree of service provided to the customer from three types of retailers: self-, limited-, and full-service.

Contractual System

is a formal agreement between parties governing their commercial relationship and obligations.

Independent Retailer

A business owner who operates their retail store independently, without being part of a chain or franchise system.

Corporate Chain

A series of interconnected companies or businesses under common ownership, often engaging in coordinated activities or strategies.