Answer to Question #221036 in Economics for Pabi

Question

If a 10% increase in income causes a 20% increase in the quantity demanded for a good or service. It can be concluded that

•  A. the income elasticity of the demand for the good or service is negative.
•  B. the price elasticity of the good or service is greater than one.
•  C. the good or service is a necessity.
•  D. the good or service is a luxury good.

Answer 1

•  C. the good or service is a necessity.