If quantity demanded declines 20 percent w

问题单项选择题

If quantity demanded declines 20 percent when incomes fall 3 percent, this good is:（）

A. a luxury good.

B. a necessity.

C. an inferior good.

答案

参考答案：A

解析：

Income elasticity is the sensitivity of demand to changes in consumer income. Income elasticity for this good = (percent change in quantity demanded)/(percent change in income)=-20/-3=6.7. Normal goods with high income elasticities (absolute values＞1) are considered luxury goods, a type of normal good that experiences a greater percentage increase in demand than the percentage increase in income.