Suppose the Income Elasticity for Transportation Is 1

question 68

Multiple Choice

Suppose the income elasticity for transportation is 1.8.Which of the following is an INCORRECT statement?

• A) Transportation is a normal good.
• B) Expenditures on transportation grow more rapidly than income grows.
• C) Expenditures on transportation will fall less rapidly than income falls.
• D) Whenever the income increases by 1 percent, the expenditure on transportation increases by 1.8 percent.

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