Which of the Following Should Be Held Constant When Calculating
Which of the following should be held constant when calculating an income elasticity of demand?
A)the price of the good
B)prices of related goods
D)All of the above should be held constant.
Food and clothing tend to have
A)small income elasticities because consumers, regardless of their incomes, choose to buy relatively constant quantities of these goods.
B)small income elasticities because consumers buy proportionately more of both goods at higher income levels than they buy at low income levels.
C)large income elasticities because they are necessities.
D)large income elasticities because they are relatively inexpensive.
The income elasticity of demand for caviar tends to be
A)high because caviar is relatively expensive.
B)low because caviar is packaged in small containers.
C)high because buyers generally feel that they can do without it.
D)low because it is almost always in short supply.
While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac-n-cheese, John's
A)is negative, and Bethany's is positive.
B)is positive, and Bethany's is negative.
C)is zero, and Bethany's approaches infinity.
D)approaches infinity, and Bethany's is zero.