If a 1 percent change in income generates a greater than 1 percent change in quantity demanded for boat rentals, then the demand for boat rentals
A) is a good illustration of Engel's law
B) reflects the demand for an inferior good
C) has a price elasticity greater than one
D) is income elastic
E) is income inelastic

Question

Quizplus · Accepted Answer

The demand for boat rentals is income elastic because a greater than 1 percent change in quantity demanded in response to a 1 percent change in income indicates that the good is highly responsive to income changes, which is the definition of income elasticity.

If a 1 Percent Change in Income Generates a Greater