Suppose that the income elasticity of demand for peanut butter is 0.75. Which of the following is true?
a. Peanut butter is a normal good, because income elasticity is positive.
b. Peanut butter is an inferior good, because income elasticity is positive.
c. Peanut butter is a normal good, because income elasticity is less than 1.
d. Peanut butter is an inferior good, because income elasticity is less than 1.
1 answer
c. Peanut butter is a normal good, because income elasticity is less than 1.
1 answer