Assume that the income elasticity of demand for bread is 0.2. A 5% increase in income will cause A) a 1% increase in the demand for bread. B) a 25% increase in the demand for bread. C) a 25% decrease in the demand for bread. D) a 10% increase in the demand for bread.

Assume that the income elasticity of demand for bread is 0.2. A 5% increase in income will cause A) a 1% increase in the demand for bread. B) a 25% increase in the demand for bread. C) a 25% decrease in the demand for bread. D) a 10% increase in the demand for bread.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter3: Market Demand And Supply

Section: Chapter Questions

Problem 7SQ

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Question

Assume that the income elasticity of demand for bread is 0.2. A 5% increase in income will cause

A) a 1% increase in the demand for bread.

B) a 25% increase in the demand for bread.

C) a 25% decrease in the demand for bread.

D) a 10% increase in the demand for bread.

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