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

-Income elasticity of demand is expected to be _____.
A)relatively high for necessities
B)positive for most products
C)relatively low for luxuries
D)negative for most products
E)zero for most products

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-Income elasticity of demand is expected to be _____.
A)relatively high for necessities 
B)positive for most products 
C)relatively low for luxuries 
D)negative for most products 
E)zero for most products

Quizplus · Accepted Answer

Income elasticity of demand is generally positive for most products because as people's income increases, they tend to buy more of these products. Luxuries tend to have a higher income elasticity of demand because people spend more on these items as their income rises, while necessities have a lower income elasticity because consumption levels change less with income.

The Figure Given Below Shows the Demand Curves for Five