Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that
A) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good.
B) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good.
C) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good.
D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a necessity.

Question

Quizplus · Accepted Answer

The price elasticity of -0.30 indicates that beer is inelastic, so an increase in price will increase revenue. The income elasticity of 0.09 suggests beer is a normal good.

Economists Estimated That the Price Elasticity of Beer Is -0