Suppose the Income Elasticity of Demand Is -0

question 127

Multiple Choice

Suppose the income elasticity of demand is -0.5 for good X.This implies that a 5% decrease in income will cause the quantity demanded of good X to

• A)increase by 2.5%,and X is an inferior good.
• B)decrease by 2.5% and X is a normal good.
• C)increase by 10% and X is an inferior good.
• D)decrease by 10% and X is a normal good.

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Definitions:

Purchase Order

A commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Consumption Method

An accounting practice that records the cost of goods sold at the time they are consumed or sold, as opposed to when they are purchased.

Office Supplies

Items needed for the daily operations of a business, such as pens, paper, and staplers.

Government-Wide Financial Statements

Comprehensive financial reports that present the financial position and results of operations of all governmental activities and entities.