What does the sign (positive/negative) of the income elasticity tell us about a good?
What will be an ideal response?
The sign of the income elasticity of demand reveals whether a good is a normal good or an inferior good: The income elasticity of demand is positive for normal goods and negative for inferior goods.
You might also like to view...
At its current production level, a monopolist's marginal revenue is $20 and its marginal cost is $10. Which of the following is CORRECT?
a. The monopolist should produce and sell more output. b. The monopolist should produce and sell less output. c. The monopolist is maximizing its profits at its current level of output. d. More information is required to decide if the firm needs to change its production.
A diversified portfolio represents a disadvantage to small investors since it requires large amounts of money to set up.
Answer the following statement true (T) or false (F)