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
You might also like to view...
The Connecticut General Incorporation act:
a. was passed in 1797 and allowed private citizens to pursue liability claims against corporations. b. provided for the state legislature to grant charters. c. expanded the liability for English joint-stock companies. d. was passed in 1837 and made incorporation a right of anyone. e. None of the above are correct.
If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will
a. increase consumer surplus. b. reduce consumer surplus. c. not affect consumer surplus. d. Any of the above are possible.