The income elasticity of demand for shoes is estimated to be 1.5. We can conclude that shoes:
A) have a relatively steep demand curve.
B) have a relatively flat demand curve.
C) are a normal good.
D) are an inferior good.

Question

Quizplus · Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good changes in response to a change in income. A positive elasticity (greater than 0) indicates that the good is a normal good, meaning demand increases as income increases. An elasticity of 1.5 suggests that shoes are a normal good, as demand for them increases more than proportionally with an increase in income.

The Income Elasticity of Demand for Shoes Is Estimated to Be