If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:
A) example of Engel's law.
B) inferior good.
C) income inelastic good.
D) income elastic good.
E) example of a substitute good.

Question

Quizplus · Accepted Answer

Boating is considered an income elastic good because a 1 percent change in income produces a greater than 1 percent change in quantity demanded of boating expenditures. This indicates that boating is a luxury item that is more sensitive to changes in income, and consumers are more likely to increase their spending on boating as their income increases.

If a 1 Percent Change in Income Generates a Greater