Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 6 - Elasticity - Discussion Questions - Page 150: 3

Answer

It means that for a 1% change in the income of a person, his demand for movies, dental service and clothes would change by 3.4%, 1%, and 0.5% respectively. Thus the demand for movies is elastic, dental service is unit elastic and clothing is inelastic to income changes. A negative income elastic Coefficient means the good is an inferior good while demand decrease with increases in income.

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