MCQ for Economics June 2008 Paper 1 Question 8

[arvind0708]

8 The table shows how an individual’s consumption of cola and nuts varies with income.
income ($) cola (cans) nuts (packets)
50 2 0
100 4 1
Which statement about income elasticity of demand over the range of income shown is true?
A For cola it is less than 1.
B For cola it is greater than 1.
C For nuts it is greater than 1.
D For nuts it is zero

sOLVE IT

 

[Xenon]

For cola, the YED is 1
For the income elasticity for nuts to be zero, consumption would have had to remain at 0 packets, instead it increased to 1. therefore none of option A, B and D are correct. Thus the solution is C