Question

48) The income elasticity of demand for skiing trips to Vermont is greater than one. Thus a trip to Vermont for skiing is ____ good. A) a normal B) an inferior C) a unit elastic D) a price elastic E) a price inelastic

49) If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the A) good is a normal good. B) good is an inferior good. C) income elasticity of demand is 0.5. D) income elasticity of demand is 2.0. E) income elasticity of demand is 5.0.

50) If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals ____ A) -1/3 and the good is an inferior good. B) 1/3 and demand for the good is income elastic. C) 3 and the good is a normal good. D) -3 and the demand for the good is income inelastic. E) 3 and the good is an inferior good

Answer 1

48) The income elasticity of demand for skiing trips to Vermont is greater than one. Thus a trip to Vermont for skiing is good. A) a normal

49) If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the B) good is an inferior good.

as the consumer demand less of an inferior good when the income increases

50) If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals C) 3 and the good is a normal good.

Income elasticity = percentage change in quantity/percentage change in income

= -15/-5 = 3 as it is positive so it is a normal good