Assume that a 6 percent increase in income in the economy produces a 3 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is:
A. negative and therefore X is an inferior good.
B. positive but less than one; therefore X is an inferior good.
C. positive and therefore X is an inferior good.
D. positive and therefore X is a normal good.
Answer: D
You might also like to view...
If the costs of producing pizza increase, which will occur?
A) The supply of pizza will decrease. B) The demand curve for pizza will shift leftward when the price of a pizza increases. C) Pizza will cease to be produced and sold. D) The quantity of pizzas supplied will increase as sellers try to cover their costs. E) The demand curve for pizza will shift rightward when the price of a pizza increases.
To signal to your insurance company that you are a low risk individual you should
a. Accept an insurance policy with no co-payments b. Accept an insurance policy with co-payments c. Accept an insurance policy with a low deductible d. None of the above