Studies Show That the Income Elasticity of Demand for Wine

question 99

Multiple Choice

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

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

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Definitions:

Eukarya

A domain of life consisting of organisms with cells that contain a nucleus, including animals, plants, fungi, and protists.

Consumers

Organisms that obtain energy by consuming other organisms or organic matter, as opposed to producing their own energy through photosynthesis or chemosynthesis.

Decomposed

The process by which organic substances are broken down into simpler organic or inorganic matter, primarily by the actions of microorganisms.

Scientific Theory

A well-substantiated explanation of some aspect of the natural world, based on a body of facts that have been repeatedly confirmed through observation and experiment.