When Income Increases from $20,000 to $30,000 the Number of Home

question 30

Multiple Choice

When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40.The income elasticity of demand for home delivered pizza equals

• A) 1.45.
• B) 0.69.
• C) 0.58.
• D) 0.40.
• E) 2.86.

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Definitions:

Coupon

A coupon is the interest payment made to bondholders, usually on an annual or semi-annual basis.

Market Rate of Interest

The prevailing rate at which interest is paid by borrowers for accessing funds in the financial market.

Selling For

The process or act of offering goods or assets for sale at a particular price.

Normal Yield Curve

When the yield curve slopes upward, it is said to be “normal,” because it is like this most of the time.