Suppose the Income Elasticity for Transportation Is 1

Multiple Choice

Suppose the income elasticity for transportation is 1.8.Which of the following is an INCORRECT statement?

A) Transportation is a normal good.
B) Expenditures on transportation grow more rapidly than income grows.
C) Expenditures on transportation will fall less rapidly than income falls.
D) Whenever the income increases by 1 percent, the expenditure on transportation increases by 1.8 percent.