{"id":221573,"date":"2025-05-29T19:41:00","date_gmt":"2025-05-29T19:41:00","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=221573"},"modified":"2025-05-29T19:41:02","modified_gmt":"2025-05-29T19:41:02","slug":"221573","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/29\/221573\/","title":{"rendered":""},"content":{"rendered":"\n<p>sale A store is having a 12-hour sale. The total number of shoppers who have begins is modeled by the function S defined by s()-.5-1 when the sale<\/p>\n\n\n\n<p><strong>Correct Answer: c. Income elasticity is positive and less than 1.<\/strong><\/p>\n\n\n\n<p>Income elasticity of demand measures how the quantity demanded of a good responds to changes in consumer income. It is calculated as the percentage change in quantity demanded divided by the percentage change in income.<\/p>\n\n\n\n<p>A <strong>normal good<\/strong> is one for which demand increases as consumer income increases. This means that the income elasticity of demand for a normal good is <strong>positive<\/strong>. Within normal goods, we distinguish between <strong>necessities<\/strong> and <strong>luxuries<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Necessities<\/strong> are normal goods with an income elasticity between <strong>0 and 1<\/strong>. This means that as income increases, demand increases, but at a slower rate than income. For example, basic food items like bread or rice are necessities\u2014people buy more when they earn more, but not dramatically more.<\/li>\n\n\n\n<li><strong>Luxuries<\/strong>, on the other hand, have an income elasticity greater than 1. This means that demand increases more than proportionately with income. Examples include luxury cars or high-end electronics.<\/li>\n<\/ul>\n\n\n\n<p>Choice <strong>(c)<\/strong>, \u201cincome elasticity is positive and less than 1,\u201d corresponds to <strong>necessities<\/strong>, which are a type of normal good. Hence, this is the correct answer.<\/p>\n\n\n\n<p>Let\u2019s examine why the other options are incorrect:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>(a) Income elasticity is zero<\/strong>: This indicates that changes in income have no effect on demand. Such goods are known as <strong>income inelastic<\/strong> or <strong>income-neutral<\/strong> (e.g., salt). These are not classified as normal goods.<\/li>\n\n\n\n<li><strong>(b) Income elasticity is -1<\/strong>: This negative elasticity implies an <strong>inferior good<\/strong>, where demand decreases as income rises (e.g., instant noodles or public transport in some contexts).<\/li>\n\n\n\n<li><strong>(d) Income elasticity is negative and less than -1<\/strong>: This also indicates an <strong>inferior good<\/strong>, and a strongly so\u2014demand falls significantly as income increases.<\/li>\n<\/ul>\n\n\n\n<p>In conclusion, normal goods always have <strong>positive income elasticity<\/strong>, and when it is <strong>between 0 and 1<\/strong>, the good is a <strong>necessity<\/strong>. Hence, <strong>option (c)<\/strong> is correct.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/05\/learnexams-banner5-131.jpeg\" alt=\"\" class=\"wp-image-221574\"\/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>sale A store is having a 12-hour sale. The total number of shoppers who have begins is modeled by the function S defined by s()-.5-1 when the sale Correct Answer: c. Income elasticity is positive and less than 1. Income elasticity of demand measures how the quantity demanded of a good responds to changes in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-221573","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221573","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=221573"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221573\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=221573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=221573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=221573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}