If the income elasticity of food is 0.72,then food is
A)a necessity and a normal good.
B)a normal good.
C)a necessity.
D)an inferior good.

Question

Quizplus · Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good responds to a change in income. A positive elasticity less than 1, like 0.72, indicates that the good is a necessity and a normal good, because demand increases with income but at a slower rate than income increases.

If the Income Elasticity of Food Is 0