Which of the following is most likely to be TRUE about relative income elasticities of demand for oatmeal and diamond bracelets?
A)Income elasticity of demand for diamond bracelets exceeds that of oatmeal.
B)Income elasticity of demand for oatmeal exceeds that of diamond bracelets.
C)Income elasticity of demand for diamond bracelets equals that of oatmeal.
D)It is not possible to make any prediction about relative income elasticities.

Question

Quizplus · Accepted Answer

Diamond bracelets are a luxury good, and their demand typically increases more than proportionally as income rises, leading to a higher income elasticity of demand compared to oatmeal, which is a necessity with less sensitivity to income changes.

Which of the Following Is Most Likely to Be TRUE