Suppose Empirical Analysis Concludes That the Income Elasticity of Demand

question 153

Multiple Choice

Suppose empirical analysis concludes that the income elasticity of demand for Kraft Dinner (KD) is -0.2.The interpretation of this result is that

• A)a 10% increase in income will lead to a 2% decrease in quantity demanded of KD.
• B)a 10% increase in income will lead to a 20% decrease in quantity demanded of KD.
• C)a 10% increase in income will lead to a 0.2% decrease in quantity demanded of KD.
• D)a 10% increase in income will lead to a 2% increase in quantity demanded of KD.
• E)a 10% increase in income will lead to a 20% increase in quantity demanded of KD.

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Definitions:

Product Structure Tree

A hierarchical representation of all the components and sub-components required to build a product, showing the relationship between the parts and the quantities needed.

DVD Format

A digital optical disc storage format used for storing high-quality video, audio, and other data.

Bill of Material

A comprehensive list of raw materials, components, and assemblies needed to manufacture or repair a product or service.

Grill Parts Kit

A set of replacement or upgrade components for a grill, including items like burners, grates, and igniters.