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

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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**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.
Transcribed Image Text:**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.
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