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Famwam Famwam
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5 years ago

Question 1.

Studies show that the income elasticity of demand for wine is approximately five. What does this mean?

• A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption.

• A 1 percent increase in income leads to a 5 percent increase in wine consumption.

• A 5 percent increase in income leads to a 1 percent increase in wine consumption.

• Wine is a relatively elastic good.

Question 2.

Which of the following items is likely to have the highest income elasticity of demand?

• a bus ride

• a meal at Taco Bell

• a vacation home in the Swiss Alps

• a tank of gasoline
Textbook 
Microeconomics

Microeconomics


Edition: 7th
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cooldawg69cooldawg69
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5 years ago
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