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    Question

    Holly, Brian, Fred, Tracy, and Melanie have

    income elasticities for veggie burgers as given below: Person Income elasticity of demand Tracy 2 Brian 1 Fred -0.75 Holly 0.1 Melanie -1.5 Who would respond the least in their purchase of veggie burgers in response to an increase in income?
    A Tracy Correct Answer Incorrect Answer
    B Fred Correct Answer Incorrect Answer
    C Holly Correct Answer Incorrect Answer
    D Brian Correct Answer Incorrect Answer
    E Melanie Correct Answer Incorrect Answer

    Solution

    Holly's demand is the most inelastic, so she would respond the least. It is the magnitude of the elasticity that matters for how much demand changes, not the sign of the elasticity.

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