Asked by Latoya Alexander on Jul 28, 2024
Verified
The income elasticity of demand for education is 3.5. Thus, a 4% increase in income will
A) decrease the quantity of education demanded by 3.5%.
B) decrease the quantity of education demanded by 14%.
C) increase the quantity of education demanded by 4%.
D) increase the quantity of education demanded by 14%.
Income Elasticity
A measure of how much the demand for a product changes in response to a change in consumers' income.
Quantity Demanded
The overall volume of a commodity or service that individuals are prepared and financially able to buy at a certain price.
Education
The process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through methods like teaching, training, storytelling, discussion, and directed research.
- Comprehend the impact of income changes on demand elasticity for different products.
- Decode the implications of income elasticity of demand pertaining to a range of commodities.
Verified Answer
ZK
Zybrea KnightAug 04, 2024
Final Answer :
D
Explanation :
The income elasticity of demand measures how the quantity demanded of a good responds to a change in income, with a positive elasticity indicating that the good is a normal good (demand increases as income increases). Here, with an elasticity of 3.5, a 4% increase in income leads to a 3.5 * 4% = 14% increase in the quantity of education demanded.
Learning Objectives
- Comprehend the impact of income changes on demand elasticity for different products.
- Decode the implications of income elasticity of demand pertaining to a range of commodities.