**Question:**If the Income Elasticity of demand for a product equals (negative .50) or -0.50, then we can conclude that the product is a luxury good.**True or False**[Options]- True- False**Explanation:**Income elasticity of demand measures how the quantity demanded of a good responds to changes in consumer income. Typically:- A positive income elasticity indicates a normal good.- A negative income elasticity (as presented in this statement) suggests that the product is an inferior good, not a luxury good.- Luxury goods typically have an income elasticity greater than 1.

A good may be defined as normal depending upom the income elaticity of the good.

Answered: If the Income Elasticity of demand for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Income Elasticity of demand for a product equals (negative .50) or -0.50, then we can colclude that the product is a luxury_good. True or False True False