The correct answer is A. Positive.
Income elasticity of demand is a measure of how much the demand for a good or service changes in response to a change in income. It is calculated by dividing the percentage change in the quantity demanded of a good or service by the percentage change in income.
If the income elasticity of demand is positive, then the demand for a good or service increases when income increases. This is because people with more money have more to spend, so they can afford to buy more goods and services.
If the income elasticity of demand is negative, then the demand for a good or service decreases when income increases. This is because people with more money have more choices, so they may choose to spend their money on other goods and services instead.
If the income elasticity of demand is equal to zero, then the demand for a good or service does not change when income changes. This is because people’s spending on the good or service is not affected by their income.
Here are some examples of goods and services with positive income elasticity of demand:
- Luxury goods: These are goods that people buy even if they don’t need them. For example, a new car or a designer handbag.
- Vacations: People with more money can afford to take more vacations.
- Entertainment: People with more money can afford to go to the movies, concerts, and other forms of entertainment.
Here are some examples of goods and services with negative income elasticity of demand:
- Basic necessities: These are goods that people need to survive. For example, food, water, and shelter.
- Public transportation: People with more money are more likely to own a car, so they may use public transportation less often.
- Cheap goods: People with more money may be less likely to buy cheap goods, because they can afford to buy higher-quality goods.
I hope this helps!