Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that:
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education.
b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education.
c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased.
d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased.
e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.
c
You might also like to view...
If a central bank does not want to allow the domestic currency to appreciate, it will ________ international reserves by selling its currency, thereby ________ the monetary base and increasing the risk of higher inflation
A) lose; decreasing B) lose; increasing C) acquire; decreasing D) acquire; increasing
When total input costs rise slower than the total units of output produced, then the per-unit production costs:
A. Will decrease B. Will increase C. Would be unaffected D. May either increase or decrease