If Joshua buys 10 percent more compact discs when his income increases by 5 percent, then, for Joshua
A) price elasticity of demand for compact discs is greater than one
B) compact discs are inferior goods
C) compact discs are price inelastic
D) compact discs are income inelastic
E) compact discs are income elastic

Question

Quizplus · Accepted Answer

The fact that Joshua buys 10 percent more compact discs when his income increases by 5 percent indicates that compact discs are income elastic for him. This is because the percentage change in quantity demanded (10%) is greater than the percentage change in income (5%), showing a strong positive response to income changes.

If Joshua Buys 10 Percent More Compact Discs When His