Asked by
Abdullah Al Faruque
on Dec 11, 2024
Verified
Nicole's income elasticity of demand for hats is 1.5. All else equal, this means that if her income increases by 20 percent, she will buy
A) 150 percent more hats.
B) 50 percent more hats.
C) 30 percent more hats.
D) 20 percent more hats.
Income Elasticity
It quantifies the sensitivity of the quantity demanded for a good to a change in consumer incomes, highlighting how demand varies as income levels shift.
- Characterize goods as normal, inferior, or luxury based on the income elasticity of their demand.
Verified Answer
CD
Learning Objectives
- Characterize goods as normal, inferior, or luxury based on the income elasticity of their demand.