ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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it is an inferior good
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it is a normal good
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it is a complement
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it is a substitute
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Detailed explanation-1: -The quantity demanded will decrease by 4%.
Detailed explanation-2: -If the income elasticity of demand is 0.5 this means a 1% change in income leads to a 0.5% change in quantity demanded. If the value of the income elasticity of demand is greater than 1 this is known as income elastic demand.
Detailed explanation-3: -A normal good has an income elasticity of demand that is positive, but less than one. If the demand for blueberries increases by 11 percent when income increases by 33 percent, then blueberries have an income elasticity of demand of 0.33, or (11/33). Blueberries qualify as a normal good.
Detailed explanation-4: -A-0.5-income elasticity means that demand is relatively inelastic. This happens in the case of a good that needs to be bought regardless of price.