fast pleaseThis indicates that satellite television service is▼an inferior or normal? good. A 7% increase in income produces a 25% increase in demand for satellite television. The income elasticity of demandfor satellite television is. (Enter your response rounded to two decimal places.)This indicates that satellite television service isgood.

Answered: A 7% increase in income produces a 25%…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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fast please

This indicates that satellite television service is

▼an inferior or normal?

good.

A 7% increase in income produces a 25% increase in demand for satellite television. The income elasticity of demand
for satellite television is. (Enter your response rounded to two decimal places.)
This indicates that satellite television service is
good.

Expert Solution

Step 1: Defining income elasticity of demand

Income elasticity of demand can eb defined as change in quantity demanded by consumers for an item or service in relation to the change in real income of a consumer. The income elasticity of demand of normal goods is between zero and one while the income elasticity of demand of inferior goods is negative. If the elasticity of demand exceeds 1 it is an indicator of luxury or superior good.

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