Respuesta :
Answer:
The correct answer is: 1.96; Luxury good; option c.
Explanation:
The income of consumers increases by 25%.
The quantity demanded of a particular brand of the automobile as a result increases by 49%.
The income elasticity of demand is
= [tex]\frac{\Delta Q}{\Delta Y}[/tex]
= [tex]\frac{49}{25}[/tex]
= 1.96
A normal good is a good whose demand increases with the increase in the consumer's income. If the income elasticity is greater than 1, it implies that the good is a luxury good.
For a truck to be a normal good, its income elasticity should be positive and for a normal good, it should be greater than 1.
