If the income elasticity of a good is positive but less than 1,as income increases

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of demand for a good to a change in income. If the income elasticity is positive but less than 1, it means that the good is a normal good (i.e. demand for the good increases as income increases), but the increase in demand will be less than proportionate to the increase in income. In other words, as income increases, people will spend a larger share of their income on other goods or services, leading to a smaller increase in demand for the good in question. Therefore, option B is the correct answer.

If the Income Elasticity of a Good Is Positive but Less