In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables.
A) less; less
B) more; more
C) more; less
D) less; more

Question

Quizplus · Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good responds to a change in income. Positive elasticities (like 0.7 and 0.5) indicate that both dairy and fruits and vegetables are normal goods, meaning that a decrease in income will lead to a decrease in the quantity demanded for both goods.

In Brazil, the Income Elasticity of Demand for Dairy Is