{"id":45349,"date":"2024-04-15T21:56:45","date_gmt":"2024-04-15T21:56:45","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=45349"},"modified":"2024-04-15T21:56:45","modified_gmt":"2024-04-15T21:56:45","slug":"if-a-good-is-a-luxury-its-income-elasticity-of-demand-is","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-a-good-is-a-luxury-its-income-elasticity-of-demand-is\/","title":{"rendered":"If a good is a luxury, its income elasticity of demand is"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Positive and less than 1&#8243; option2=&#8221;Negative but greater than 1&#8243; option3=&#8221;Positive and greater than 1&#8243; option4=&#8221;Zero&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is C. Positive and greater than 1.<\/p>\n<p>A luxury good is a good for which the demand increases more than proportionately with an increase in income. This means that if a person&#8217;s income increases by 10%, they will spend more than 10% more on luxury goods.<\/p>\n<p>The income elasticity of demand is a measure of how responsive the demand for a good is to changes in income. It is calculated by dividing the percentage change in the quantity demanded of a good by the percentage change in income.<\/p>\n<p>For a luxury good, the income elasticity of demand is positive and greater than 1. This means that the demand for a luxury good increases more than proportionately with an increase in income.<\/p>\n<p>Option A is incorrect because the income elasticity of demand for a necessity is positive and less than 1. This means that the demand for a necessity increases, but not as much as proportionately, with an increase in income.<\/p>\n<p>Option B is incorrect because the income elasticity of demand for a normal good is positive and less than 1. This means that the demand for a normal good increases, but not as much as proportionately, with an increase in income.<\/p>\n<p>Option D is incorrect because the income elasticity of demand for a good is zero if the demand for the good does not change with an increase in income.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Positive and less than 1&#8243; option2=&#8221;Negative but greater than 1&#8243; option3=&#8221;Positive and greater than 1&#8243; option4=&#8221;Zero&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-45349","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>If a good is a luxury, its income elasticity of demand is<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-a-good-is-a-luxury-its-income-elasticity-of-demand-is\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If a good is a luxury, its income elasticity of demand is\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Positive and less than 1&#8243; 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