Calculate the Income Elasticity If an 8 Percent Increase in Income

question 73

Multiple Choice

Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce.

• A)-0.66
• B)0.5
• C)1.5
• D)2

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Definitions:

Complex Products

Products that have multiple components, intricate features, or require advanced technology for production, often requiring specialized knowledge to design, manufacture, and use.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the activities they require.

Fixed Overheads

Expenses that remain constant regardless of production or sales volumes within a specific time frame, like lease payments or wages.

Cost Behaviour

The manner in which a cost changes in relation to changes in business activity levels.