The income elasticity of demand _____
a. must be negative because of the law of diminishing marginal utility
b. could be positive, negative or zero, depending on the nature of the good
c. must be positive for all goods because consumers tend to buy more at higher incomes
d. is usually zero because "you can only have so much"
e. can never be zero
b
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Increase in the real interest rate will ________ the expenditure curve:
A) decrease. B) increase. C) not change. D) none of the above.
When an American household purchases a bottle of Italian wine for $100,
a. U.S. consumption does not change, U.S. net exports decrease by $100, and U.S. GDP decreases by $100. b. U.S. consumption does not change, U.S. net exports increase by $100, and U.S. GDP increases by $100. c. U.S. consumption increases by $100, U.S. net exports decrease by $100, and U.S. GDP does not change. d. U.S. consumption increases by $100, U.S. net exports do not change, and U.S. GDP increases by $100.