Suppose the income elasticity of demand for toys

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Reference no: EM13999043

1. Suppose the income elasticity of demand for toys is +2.0. This means that:

A. A 10 percent increase in income will increase the purchase of toys by 2 percent.

B. A 10 percent increase in income will increase the purchase of toys by 20 percent.

C. A 10 percent increase in income will decrease the purchase of toys by 2 percent.

D. Toys are an inferior good.

2. If the income elasticity of demand for margarine is -5.00, this means that:

A. Less margarine will be purchased when its price falls.

B. Margarine is a substitute for butter.

C. Margarine is a normal good.

D. Margarine is an inferior good.

Reference no: EM13999043

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