If a Product's Income Elasticity of Demand Is 1

question 128

Multiple Choice

If a product's income elasticity of demand is 1.7,we can conclude that

• A)an increase in income will lead to an increase in demand for the product.
• B)the product is certainly a necessity.
• C)the product is an inferior good.
• D)a decrease in income will lead to an increase in demand for the product.
• E)an increase in income will lead to an increase in quantity demanded of this product by 1.7%.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer.

Liquidity

A measure of how easily assets can be converted into cash without affecting their market price.

Accounts Receivable

Denotes the funds that customers owe a business for received goods or services that remain unpaid.

Notes Receivable

Claims held by a creditor that are supported by promissory notes, representing a right to receive payments from debtors.