Author Question: For Product X, the income elasticity of demand is 1.16. Which of the following is therefore ... (Read 67 times)

HCHenry · **on:** Jun 29, 2018

For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely TRUE?

A) Product X is a necessity.
B) Product X is income elastic.
C) Product X is a substitute for some other good.
D) Product X is something that mostly poor people will buy.

Question 2

The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. Which of the following would lead the quantity of doughnuts in Kaffenia to differ from the efficient quantity?

A) The existence of many producers and sellers of doughnuts.
B) The existence of just one producer and seller of doughnuts.
C) Damage to the environment from the disposal of oil used to cook the doughnuts.
D) Both answers B and C are correct.