Suppose that the income elasticity of demand for peanut butter is 0.75. Which of the following is TRUE?
A) Peanut butter is a normal good, because income elasticity is positive.
B) Peanut butter is an inferior good, because income elasticity is positive.
C) Peanut butter is a normal good, because income elasticity is less than 1.
D) Peanut butter is an inferior good, because income elasticity is less than 1.
A
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The textbook defines a "well-organized" market as a market in which
A) all information available to sellers and buyers is also available to other parties to exchange transactions. B) bids and offers of buyers and sellers are brought together to establish a single price over a wide area. C) the government regulates maximum and minimum prices. D) the terms of exchange between buyers and sellers are controlled by a professional marketing association.
In the recent Global Economic Crisis, the end of cash-out mortgage refinancing caused
A) LM curve to shift to the right. B) LM curve to shift to the left. C) IS curve to shift to the left. D) LM curve to shift to the right.
If we measure the income elasticity of a good as ?1.8, this means this good is a(n):
a. luxury good. b. substitute good. c. complementary good. d. inferior good. e. good from the food group.
The price mechanism solves the "for whom" problem by assigning high prices to goods in high demand and letting customers choose whether to purchase them
a. True b. False Indicate whether the statement is true or false