Studies Show That the Income Elasticity of Demand for Wine

question 242

Multiple Choice

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

• A)A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption.
• B)A 1 percent increase in income leads to a 5 percent increase in wine consumption.
• C)A 5 percent increase in income leads to a 1 percent increase in wine consumption.
• D)Wine is a relatively elastic good.