Author Question: If the income elasticity of demand for a service is 0.6, then a 5 percent increase in income will ... (Read 246 times)

fnuegbu · **on:** Jul 1, 2018

If the income elasticity of demand for a service is 0.6, then a 5 percent increase in income will generate a __________ in quantity demanded
a. 3 percent decrease
b. 3 percent increase
c. 8.33 percent decrease
d. 8.33 percent increase
e. 0.12 percent decrease

Question 2

A 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a service. This service is a(n) __________ good and demand is __________.
a. normal; elastic
b. normal; inelastic
c. normal; unit elastic
d. inferior; elastic
e. inferior; inelastic