If a Good Has an Income Elasticity of 1

question 36

Multiple Choice

If a good has an income elasticity of 1.83,which of the following can be said about it?

• A)It is a normal good,and a necessity.
• B)It is an inferior good,and a necessity.
• C)The good probably has a lot of close substitutes available.
• D)None of these statements is true.

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Definitions:

Misallocation

Inefficient distribution or use of resources, often resulting in reduced economic efficiency or productivity.

Improved Quality

Enhancements or upgrades to the standards of products, services, or processes to exceed previous benchmarks.

Partnership

A formal business arrangement involving two or more persons who equally share in the management and financial gains.

Real Wage

Real wage refers to the purchasing power of wages, taking into account the effects of inflation or deflation. It represents how much goods and services wages can actually buy.