For which product is the income elasticity of demand most likely to be positive?
A) Retreaded tires
B) Cabbage
C) Used clothing
D) Computers

Question

Quizplus · Accepted Answer

Income elasticity of demand measures the percentage change in quantity demanded in response to a 1% change in income. Products that are considered luxury goods or have a strong link to higher income levels are likely to have a positive income elasticity, meaning as income rises, demand for the product increases. Computers are often considered luxury items and have a strong connection with higher income levels. Therefore, the income elasticity of demand for computers is most likely to be positive.

For Which Product Is the Income Elasticity of Demand Most