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.

---

Definitions:

Original Cost

The initial purchase price or acquisition cost of an asset or investment.

Statement of Cash Flows

It's a fiscal summary that tracks changes in balance sheet entries and the impact of income on cash and equivalents, sorting these modifications by operating, investing, and financing functions.

Indirect Method

A cash flow statement preparation method that adjusts net income for changes in non-cash accounts to calculate operating cash flow.

Operating Activities

Operating activities include the primary, day-to-day tasks and transactions related to running a business, which contribute to generating revenue.