The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-As income levels rose moderately last year in the San Jose area, it was observed by local realtors that housing sales increased substantially. It is clear from this information that, everything else held constant, the income elasticity of demand for houses is _____.
A)negative and relatively low
B)negative and relatively high
C)positive and relatively low
D)positive and relatively high
E)neither positive nor negative

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-As income levels rose moderately last year in the San Jose area, it was observed by local realtors that housing sales increased substantially. It is clear from this information that, everything else held constant, the income elasticity of demand for houses is _____.
A)negative and relatively low 
B)negative and relatively high 
C)positive and relatively low 
D)positive and relatively high 
E)neither positive nor negative

Quizplus · Accepted Answer

The increase in income had a positive effect on the demand for houses, indicating that houses are a normal good. The increase in demand for houses is substantial, implying that the income elasticity of demand is relatively high.

The Figure Given Below Shows the Demand Curves for Five