Answered

Explore a diverse range of topics and get expert answers on IDNLearn.com. Whether it's a simple query or a complex problem, our community has the answers you need.

Which statement below is true about the $75 Peter and his wife occasionally spend for two meals and drinks at a Korean barbecue restaurant since Peter was promoted, if the income elasticity for the expense is 2?

a. It is a substitute.
b. It is a luxury good.
c. It is a complement.
d. It is an inferior good.

Sagot :

Tundexiidn

Answer:

b. It is a luxury good.

Explanation:

Income Elasticity = 2

The Income Elasticity > 1. So, it is luxury goods. In economics, income elasticity for luxury goods is greater than 1 (i.e. Income Elasticity > 1). So option b is correct.

We are delighted to have you as part of our community. Keep asking, answering, and sharing your insights. Together, we can create a valuable knowledge resource. IDNLearn.com is committed to providing accurate answers. Thanks for stopping by, and see you next time for more solutions.