Use the following for questions 163-168.
Exhibit: Johnson's Income and Expenditures
Quantity Purchased per Month

-(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for pizzas is:
A) -1.4.
B) approximately -0.7.
C) 0.
D) approximately 0.7.

Question

Use the following for questions 163-168.
Exhibit: Johnson's Income and Expenditures
Quantity Purchased per Month
 
-(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for pizzas is:
A) -1.4. 
B) approximately -0.7. 
C) 0. 
D) approximately 0.7.

Quizplus · Accepted Answer

Johnson's income elasticity of demand for pizzas is approximately -0.7 because as his income increases, his demand for pizzas decreases. This is because pizzas are a normal good, and as income increases, consumers tend to substitute more expensive goods for less expensive goods.

Use the Following for Questions 163-168