Nancy's income has just risen from $950 per week to $1,050 per week. As a result, she decides to double the number of movies she attends each week. Nancy's demand for movies is
A) income elastic.
B) positively cross inelastic.
C) price elastic.
D) income inelastic.
E) price inelastic.

Question

Quizplus · Accepted Answer

Nancy's increase in income has led to a doubling of her movie attendance, indicating that her demand for movies is responsive to changes in her income. This indicates income elasticity, making choice A the best answer. Choices B and E are incorrect because there is no information given about the price of movies, so we cannot determine the price elasticity of Nancy's demand for movies. Choice D is also incorrect because Nancy's change in income has led to a significant change in her movie attendance, indicating that her demand is not income inelastic.

Nancy's Income Has Just Risen from $950 Per Week to $1,050