If a product's income elasticity of demand is 1.7,we can conclude that
A)an increase in income will lead to an increase in demand for the product.
B)the product is certainly a necessity.
C)the product is an inferior good.
D)a decrease in income will lead to an increase in demand for the product.
E)an increase in income will lead to an increase in quantity demanded of this product by 1.7%.

Question

Quizplus · Accepted Answer

An income elasticity of demand greater than 1 indicates that the good is a luxury good, and a 1.7 elasticity value indicates a relatively strong response to changes in income. Therefore, an increase in income will lead to an increase in demand for the product.

If a Product's Income Elasticity of Demand Is 1