Assume the supply of a good is perfectly elastic and the income elasticity of demand is...

Assume the supply of a good is perfectly elastic and the income elasticity of demand is 13.7. When the income of households increases by 5%, the equilibrium quantity in the market will:

Select one:
a. increase by 13.7%
b. decrease by 13.7*5%
c. decrease by 13.7%
d. increase by 13.7*5%
e. increase by 5%

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Expert Solution

Rahul Sunny answered 1 year ago

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