The income elasticity of demand helps determine, empirically, whether a good is
A. normal or inferior.
B. a necessity or a luxury.
C. unit elastic or perfectly inelastic in its own demand.
D. a complement or a substitute to another good.
Answer: A
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The 45-degree line in the Keynesian income-expenditure graph indicates
a. the basic size of the spending flow. b. points where total output is equal to aggregate expenditure. c. the size of the multiplier. d. the size of the marginal propensity to save.
In regards to its shape, a perfectly competitive firm's demand curve is _____.
Fill in the blank(s) with the appropriate word(s).
How does microeconomics differ from macroeconomics? Would the supply of iPhones in the United States be studied under microeconomics or macroeconomics? What about the growth rate of total economic output in the national economy?
What will be an ideal response?
If the MPC increases in value, what will happen to the slope of the consumption function?
a. The slope will decrease and the consumption function will become flatter. b. The slope will decrease and the consumption function will become steeper. c. The slope will increase and the consumption function will become steeper. d. The slope will increase and the consumption function will become flatter.