84-Income_Elasticity_Demand_Key

84-Income_Elasticity_Demand_Key - Student Name: 12 August...

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Student Name: 12 August 2010 Total Possible Marks: 11 Income Elasticity of Demand Complete in pen or pencil and hand into your teacher when ready. Each multiple choice question carries one mark. Select one answer only. 1 1. Income elasticity of demand is defined as The responsiveness of demand following a change in the income of consumers 1 2. When demand for a product is income inelastic, the percentage change in quantity demanded is [A]less than the percentage change in income 1 3. The income elasticity of demand for a normal good is always positive / greater than zero 1 4. It was estimated in 2003 that milk has an income elasticity of demand of -0.6. What can be concluded about milk from this information? That milk is an inferior good because the income elasticity of demand is negative 1 5. An income reduction of 15% causes Geoff to increase his purchases of minced beef by 10%. Which of the following statements is most likely to be correct? A. The income elasticity of demand for minced beef is -2/3 and ground beef is a superior good
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This note was uploaded on 02/08/2012 for the course ECO 51844 taught by Professor Sabet during the Spring '11 term at FIU.

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