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

-Which of the following items is likely to have the highest positive income elasticity of demand?
A)Bread
B)Jewelry
C)Soap
D)A plumber's service
E)Table salt

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-Which of the following items is likely to have the highest positive income elasticity of demand?
A)Bread 
B)Jewelry 
C)Soap 
D)A plumber's service 
E)Table salt

Quizplus · Accepted Answer

Products that are seen as luxury items, such as jewelry, typically have a higher positive income elasticity of demand. This means that as consumers' incomes increase, they are more likely to purchase these types of goods. In contrast, necessities such as bread, soap, and table salt may have a lower income elasticity of demand because consumers are likely to purchase them regardless of changes in their income. A plumber's service is a service, not a product, and therefore does not have income elasticity of demand.

The Figure Given Below Shows the Demand Curves for Five