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13 November, 02:17

When a 5% increase in income causes a 3% drop in quantity demanded of a good Group of answer choices the cross-price elasticity is. 6 and the good is an inferior good. the income elasticity is 1.67 and the good is a normal good. the income elasticity is. 6 and the good is an inferior good.

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  1. 13 November, 04:26
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    the income elasticity is - 0.6 and the good is an inferior good.

    Explanation:

    Data provided as per the question below:-

    Percentage change in quantity demanded = - 3%

    Percentage change in income = 5%

    The computation of Income elasticity of demand is shown below:-

    Income elasticity of demand = Percentage change in quantity demanded : Percentage change in income

    = - 3% : 5%

    = - 0.6

    The good is a lesser good since the quantity demanded does not increase but it falls by that profits.
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