If John purchases 10 percent more compact discs when his income increases 5 percent, then:
A) his total expenditure on compact discs will fall as his income increases.
B) compact discs would be classified as an inferior good.
C) compact discs would be price elastic.
D) compact discs would be income inelastic.
E) compact discs would be income elastic.

Question

Quizplus · Accepted Answer

Since John purchases 10 percent more compact discs when his income increases 5 percent, it can be inferred that compact discs are a normal good and his demand for them increases with an increase in income. Therefore, compact discs would be classified as income elastic.

If John Purchases 10 Percent More Compact Discs When His