Which of the following items is likely to have the highest income elasticity of demand?
A)a bus ride
B)a meal at Taco Bell
C)a vacation home in the Swiss Alps
D)a tank of gasoline

Question

Quizplus · Accepted Answer

Vacation homes in Swiss Alps are typically luxury goods, and as such, have a high income elasticity of demand. As people's income increases, they are more likely to spend money on expensive vacation homes.

Which of the Following Items Is Likely to Have the Highest