ENTREPRENEURIAL PLANNING
MARKETING PLAN DEVELOPMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
A business sale a product with an estimated income elasticity Of demand of-1. Based on this data which one of the following statements is likely to be true?
|
|
The business will increase output of the product when consumer Incomes are rising
|
|
|
Sales of the product could increase despite an economic recession
|
|
|
There is no point in spending any money on promoting thisProduct
|
|
|
If the price is reduced by 10%, sales of the product are likely to Increase by 10%
|
Explanation:
Detailed explanation-1: -If the income elasticity of demand is greater than 1, the good or service is considered a luxury and income elastic. A good or service that has an income elasticity of demand between zero and 1 is considered a normal good and income inelastic.
Detailed explanation-2: -The formula for calculating income elasticity of demand is the percent change in quantity demanded divided by the percent change in income.
Detailed explanation-3: -E = 0: demand is perfectly inelastic, meaning that demand does not change at all when the price changes. 0 < E < 1: in these cases, the % change in demand from is smaller than the percentage change in price, and the demand is inelastic.
There is 1 question to complete.