Suppose That the Value of the Income Elasticity of Demand

question 172

Multiple Choice

Suppose that the value of the income elasticity of demand for a product is -2 and average incomes decrease by 10%.What will happen to the quantity demanded?

• A)It will increase by 5%.
• B)It will increase by 20%.
• C)It will decrease by 5%.
• D)It will decrease by 20%.
• E)It cannot be determined without further information.

---

Definitions:

Whole-Life Insurance

A type of permanent life insurance policy that offers a death benefit alongside a savings account component, covering the insured for their entire life.

Long-Term Bonds

Debt securities with maturities typically longer than 10 years, offering regular interest payments and repayment of principal at maturity.

Life Insurance Firms

Companies that provide financial compensation to beneficiaries upon the death of the insured person.

Death Benefit

The sum paid to a policyholder's beneficiaries upon their death, typically in life insurance and annuities.