For Most Goods and Services the Income Elasticity of Demand

question 212

Multiple Choice

For most goods and services the income elasticity of demand is

• A) negative.
• B) positive.
• C) invisible.
• D) inverse.

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Definitions:

Public Good

A product that one individual can consume without reducing its availability to another individual, and from which no one is excluded, such as national defense or public parks.

Public Good

A good that is non-excludable and non-rivalrous, meaning that its use by one individual does not reduce its availability to others and people cannot be prevented from using it.

Marginal Cost

The increase in total production costs resulting from producing one additional unit of a good or service.

Market Allocating Resources

The process through which a free market economy determines the distribution of resources based on supply and demand dynamics.