When consumers' incomes increased 6 percent, the quantity of wine bought increased 12 percent. This result means
A) wine is a luxury.
B) the demand for wine is income inelastic.
C) wine is a necessity.
D) wine is an inferior good.

Question

Quizplus · Accepted Answer

The income elasticity of demand is greater than 1 (12%/6% = 2), indicating that wine is a luxury good, as demand increases more than proportionally with income.

When Consumers' Incomes Increased 6 Percent, the Quantity of Wine