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Author Question: Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a ... (Read 128 times)

abarnes

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on: Jun 29, 2018
Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good. Calculate the income elasticity of demand for the good and determine what type of good it is.
 
  What will be an ideal response?

Question 2

Adverse selection is a situation in which one party to an economic transaction has less information than the other party.
 
  Indicate whether the statement is true or false
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scottmt

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Income elasticity of demand = -0.5. The good is inferior.

Answer to Question 2

FALSE


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