Suppose the Income Elasticity of Demand for a Private College

Multiple Choice

Suppose the income elasticity of demand for a private college education is equal to 1.5.This means that

A) every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education
B) every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education
C) a 10 percent increase in income causes a 15 percent increase in the demand for a private college education
D) a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
E) a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent