If a Good Has an Income Elasticity of 0

question 16

Multiple Choice

If a good has an income elasticity of 0.18,which of the following can be said about it?

• A)It is a normal good,and a necessity.
• B)It is a normal good,and a luxury good.
• C)It is an inferior good,and a necessity.
• D)It is an inferior good,and a luxury.

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Definitions:

Endowment

Funding provided to an institution or individual in the form of investment income, typically aimed at supporting specific activities or maintaining long-term financial stability, differentiated here as purpose-specific funds.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Consumes

To use up resources or goods, typically in the context of eating, drinking or utilizing products to satisfy needs or wants.

Utility Function

A mathematical representation that describes how consumers rank different bundles of goods according to their level of satisfaction or utility.