Answer to Question #48363 in Economics of Enterprise for Akhona

Question

IF the income elasticity of demand for hormone-free milk is estamited +5.0, briefly define what this value means and what it implies about the nature of the product

Answer 1

If the income elasticity of demand is +5.0,this means that demand for the hormone-free milk rises more than proportionate
to a change in income. Such high elasticity characterizes a hormone-free milk as a luxury good.