An Increase in Income from $30,000 to $40,000 Leads to a Decrease

question 238

Multiple Choice

An increase in income from $30,000 to $40,000 leads to a decrease in the quantity demanded from 50 to 40.The income elasticity of demand is:

• A) 7/9
• B) -7/9
• C) 1
• D) 9/7
• E) -9/7

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Definitions:

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Fixed Costs

Costs that remain constant irrespective of the level of production or sales, including expenses like rent, salaries, and insurance.

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Fixed Costs

Expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.