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:
1. the price elasticity of the good or service is greater than one
2. the income elasticity of the demand for the good or service is negative
3. the good or service is a necessity
4. the good or service is a luxury good

Answer 1

3. the good or service is a necessity