Answer to Question #93989 in Economics for Wilson Pilane

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

Answer 1

If a 10% increase in income causes a 20% increase in the quantity demanded for a good or service it can be concluded that it is a luxury good, because the income elasticity of demand is 20/10 = 2, and it is greater than 1.