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Author Question: If a good has an income elasticity of demand greater than 1, one might classify that good as A) a ... (Read 52 times)

mcmcdaniel

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on: Jul 1, 2018
If a good has an income elasticity of demand greater than 1, one might classify that good as
 
  A) a necessity.
  B) a luxury.
  C) unusual.
  D) inelastic.

Question 2

If the Engel curve for a good is upward sloping, the demand curve for that good must be downward sloping.
 
  What will be an ideal response?
Microeconomics ¦ Perloff ¦ 8th Edition
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bobsmith

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Reply #1 on: Jul 1, 2018
Answer to Question 1

B

Answer to Question 2

True. If the Engel curve is upward sloping, the good is normal. As a result, the income effect will reinforce the substitution effect and guarantee a downward-sloping demand curve.


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