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.

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Definitions:

Large Audience

A substantial number of viewers, listeners, or spectators gathered for an event or through a broadcast media platform.

No Free Lunch

A principle asserting that everything has a cost, and nothing valuable can be obtained without effort or exchange.

Economists

Professionals who study, develop, and apply theories and concepts from economics to analyze data and understand economic issues and trends.

Free Goods

Goods that are abundant and available without cost; they are not scarce in relation to demand, such as air and sunlight.