When Noelle received a promotion at work,her income rose by 50 percent.The income elasticity of demand for steak was found to be 1.5.For her,steak is a(n)
A) inferior good.
B) necessity.
C) complement to potatoes.
D) substitute for chicken.
E) luxury.

Question

Quizplus · Accepted Answer

A high income elasticity of demand (greater than 1) signifies that the good is a luxury, and a 50% increase in income implies that Noelle is likely to have a significant increase in her purchasing power for non-essential goods. Therefore, steak is a luxury item for Noelle.

When Noelle Received a Promotion at Work,her Income Rose by 50