Suppose European incomes increase by 4 percent per year,and as a result,U.S.exports of farm goods to Europe rise by less than 4 percent annually.The elasticity that can be computed from this information is the

Question

Quizplus · Accepted Answer

The given scenario describes an increase in European incomes leading to a rise in U.S. exports of farm goods to Europe. The elasticity being computed here is the relationship between the change in quantity demanded of U.S. farm exports and the change in European income, which is the definition of income elasticity of demand. Therefore, choice C is the correct answer.

Suppose European Incomes Increase by 4 Percent Per Year,and as a Result,U.S.exports