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If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens Rises from 300 rooms per night to 350 rooms per night. Therefore, the income elasticity of demand is positive , meaning that hotel rooms at the Triple Sevens area normal good .

Respuesta :

jepessoa

Answer:

True

Explanation:

income elasticity of demand = % change in quantity demanded / % change in income

income elasticity of demand = 16.7% / 20% = 0.83, since it is positive, then they are normal goods but not luxury goods since the income elasticity of demand is ≤ 1.

If IED is negative, that means that a good is an inferior good, since the more you earn, the less you consume.

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