Suppose that the income elasticity of demand for college education is 1.3.This indicates that
A)college education is a necessity
B)college education is an inferior good
C)the demand curve for college education slopes downward
D)college education is a normal good
E)the demand curve for college education is horizontal

Question

Quizplus · Accepted Answer

An income elasticity of demand greater than 1 indicates that the good is a normal good, meaning that as income increases, the quantity demanded for the good also increases. Therefore, choice (D) is correct, as it states that college education is a normal good. Choices (A), (B), and (E) are incorrect because they do not accurately reflect the meaning of income elasticity of demand.

Suppose That the Income Elasticity of Demand for College Education