In a regression of Q on income (i)and other explanatory variables, the coefficient for income was found to be 0.15. This means that the good is
A) a necessity.
B) an inferior good.
C) a luxury.
D) substitute to an expensive good.

Question

Quizplus · Accepted Answer

A coefficient of 0.15 for income suggests that the good is a necessity, as it indicates a positive but inelastic relationship between income and quantity demanded.

In a Regression of Q on Income (I)and Other Explanatory