iven are the following income elasticities of demand: Product Incone Elasticity Movies +3.4 Dental services + 1.0 + 0.5 Clothing he values indicate that O a 5 percent increase in the price of dental services will decrease the demand for dental services by 5 perce movies and dental services are normal goods, but clothing is an inferior good. O a 10 percent increase in income will increase the demand for clothing by 20 percent. O a1 percent increase in income will increase the quantity of movies demanded by 3.4 percent. A negative income-elasticity coefficient means that O the good is inferior such that if income falls, the quantity demanded of the good will fall. the good is normal such that if the price falls, the quantity demanded of the good will rise. the good is inferior such that if income falls, the quantity demanded of the good will rise. O the good is inferior such that if the price falls, the quantity demanded of the good will rise.
iven are the following income elasticities of demand: Product Incone Elasticity Movies +3.4 Dental services + 1.0 + 0.5 Clothing he values indicate that O a 5 percent increase in the price of dental services will decrease the demand for dental services by 5 perce movies and dental services are normal goods, but clothing is an inferior good. O a 10 percent increase in income will increase the demand for clothing by 20 percent. O a1 percent increase in income will increase the quantity of movies demanded by 3.4 percent. A negative income-elasticity coefficient means that O the good is inferior such that if income falls, the quantity demanded of the good will fall. the good is normal such that if the price falls, the quantity demanded of the good will rise. the good is inferior such that if income falls, the quantity demanded of the good will rise. O the good is inferior such that if the price falls, the quantity demanded of the good will rise.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Given are the following income elasticities of demand:
Product
Movies
G-
Incone Blasticity
+3.4
Dental services
Clothing
+1.0
+ 0.5
The values indicate that
Oa 5 percent increase in the price of dental services will decrease the demand for dental services by 5 percen
O movies and dental services are normal goods, but clothing is an inferior good.
Oa 10 percent increase in income will increase the demand for clothing by 20 percent.
Oa1 percent increase in income will increase the quantity of movies demanded by 3.4 percent.
A negative income-elasticity coefficient means that
O the good is inferior such that if income falls, the quantity demanded of the good will fall.
O the good is normal such that if the price falls, the quantity demanded of the good will rise.
the good is inferior such that if income falls, the quantity demanded of the good will rise.
O the good is inferior such that if the price falls, the quantity demanded of the good will rise.
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