If Tastes for Foreign Goods and Services Go Up, Then

question 120

Multiple Choice

If tastes for foreign goods and services go up, then we would expect imports to:

• A) increase.
• B) decrease.
• C) remain constant.
• D) increase and then sharply decrease more.

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Definitions:

Income Elasticity

It quantifies the sensitivity of the quantity demanded for a good to a change in consumer incomes, highlighting how demand varies as income levels shift.

Price Elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Supply

The total quantity of a product or service that is available for purchase at a given price and time.

Elastic Supply

A situation where the quantity supplied of a good or service changes significantly when its price changes.