Assume the income elasticity of a good has been calculated to be +0.83.Based on this information,we can infer that the good is:
A)a normal good and a luxury.
B)an inferior good and a necessity.
C)a normal good and a necessity.
D)an inferior good and a luxury.

Question

Quizplus · Accepted Answer

Since the income elasticity is positive, the good is a normal good. Additionally, since the income elasticity is less than 1 (0.83), the good is a necessity rather than a luxury.

Assume the Income Elasticity of a Good Has Been Calculated