The income elasticity of demand for restaurant meals is 1.61. So
A) if income increases by 16.1 percent, the quantity demanded of restaurant meals will increase by 10 percent.
B) if income increases by 10 percent, the quantity demanded of restaurant meals will increase by 16.1 percent.
C) restaurant meals are an income elastic normal good.
D) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

The income elasticity of demand of 1.61 indicates that restaurant meals are an income elastic normal good, meaning demand increases more than proportionately with income. Thus, a 10% increase in income leads to a 16.1% increase in demand.

The Income Elasticity of Demand for Restaurant Meals Is 1