Studies shows that income elasticity of demand for food is
A)less than 1,but greater than 0.
B)more than 1,but less than 2.
C)less than 0.
D)more than 2.

Question

Quizplus · Accepted Answer

Income elasticity of demand measures the change in quantity demanded in response to a change in income. Typically, food is considered a necessity, so a small increase in income will lead to a proportionally smaller increase in demand for food. Therefore, the income elasticity of demand for food is less than 1, indicating that it is a necessary but not a luxury good. However, it is greater than 0, indicating that at least some increase in demand occurs with an increase in income.

Studies Shows That Income Elasticity of Demand for Food Is