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Suppose the Income Elasticity of Demand for Toys Is -2

Question 143

Multiple Choice

Suppose the income elasticity of demand for toys is -2.5. This means that


A) a 3 percent increase in income will decrease the purchase of toys by 7.5 percent.
B) a 3 percent increase in income will decrease the purchase of toys by 1.2 percent.
C) a 3 percent increase in income will increase the purchase of toys by 7.5 percent.
D) toys are a normal good.

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