If the quantity of carrots demanded increases by a large percentage when income increases by a small amount,the demand for carrots is
A)price elastic.
B)price inelastic.
C)income inferior.
D)income inelastic.
E)income elastic.

Question

Quizplus · Accepted Answer

The fact that the quantity of carrots demanded increases by a large percentage when income increases by a small amount indicates that carrots are a luxury good, meaning that as income increases, demand for carrots increases as well. This implies that the demand for carrots is income elastic.

If the Quantity of Carrots Demanded Increases by a Large