Suppose that income increases and the quantity demanded of guitars stays the same. This means that the income elasticity of guitars is unitary.

Name: Suppose that income increases and the quantity demanded of guitars stays the same. This means that the income elasticity of guitars is unitary.
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Question

Quizplus · Accepted Answer

Income elasticity of demand measures how quantity demanded changes with income. If quantity demanded stays the same despite an income increase, the income elasticity is zero, not unitary.

Suppose That Income Increases and the Quantity Demanded of Guitars