Suppose the value of income elasticity of demand for a private college education is equal to 1.5. This means that
A) every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education.
B) every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education.
C) a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased.
D) a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased.
E) a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.

Question

Quizplus · Accepted Answer

Income elasticity of demand of 1.5 means that a 10% increase in income results in a 15% increase in the quantity demanded.

Suppose the Value of Income Elasticity of Demand for a Private