When income increases by 1%, the quantity demanded of a good decreases by 2%. What is the income elasticity of the good? Is the good normal or inferior? Why?
What will be an ideal response?
The income elasticity is -2. The good is inferior because the income elasticity is negative.
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The United States is a country with a high saving rate
Indicate whether the statement is true or false
If a $500 tax is placed legally (statutorily) on the buyers of new couches and as a result the price of couches at stores rises by $200, the actual burden of the tax
a. falls completely on couch buyers. b. falls completely on couch sellers. c. is $200 on couch buyers and $300 on sellers. d. is $300 on couch buyers and $200 on sellers.
Which of the following is true regarding the relationship between the elasticity of demand for an individual firm and the elasticity of demand for the market in a Cournot oligopoly with five identical firms?
A. EF = (1/5)EM B. EF = (df(p)/dP) × (5P/Q) C. EF = (df(p)/dP) × (5Q/P) D. EM = 5EF
In general, the production and use of capital ________ the productivity of labor and normally ________ wages.
A. has no effect on; has no effect on B. enhances; drives down C. diminishes; drives down D. enhances; drives up