We can expect that the income elasticity of demand for gourmet catered meals would be ________ the income elasticity of demand for basic groceries.
A)equivalent to
B)not comparable to
C)less than
D)higher than
E)lower than

Question

Quizplus · Accepted Answer

Gourmet catered meals are a luxury item, therefore, their demand is more sensitive to changes in income than basic groceries. Basic groceries are considered a necessity, and their demand remains relatively constant regardless of changes in income. Therefore, the income elasticity of demand for gourmet catered meals is likely to be higher than the income elasticity of demand for basic groceries.

We Can Expect That the Income Elasticity of Demand for Gourmet