If the Demand for a Product Has an Income Elasticity

question 56

Multiple Choice

If the demand for a product has an income elasticity of -3.4,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 a normal good.
• D)the product has a rising income-consumption curve.
• E)a decrease in income will lead to an increase in demand for the product.

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Definitions:

Categorical Variables

Categorical variables are qualitative variables that can take on different categories, but which do not have a natural order or ranking.

Degrees Of Freedom

The number of independent values or quantities that can vary in the analysis without violating any constraints.

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive."

Critical Values

Thresholds or boundaries in statistical tests that define the region where the null hypothesis can either be rejected or not rejected.