(Solved): 7. Using the income elasticity of demand to characterize goods A survey taken by residents from the ...

7. Using the income elasticity of demand to characterize goods A survey taken by residents from the imaginary town of Draw City tells economists that the following changes result from a $$10\%$$ rise in income: Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on the income elasticities, classify each good as elther a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elastioty of demand can be positive or negative, and the sign gives important information.) Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on the income elasticities, classily each good as either a normal good or an inferior good. (Hint: Bo careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign gives important information.) Which of the following three goods is most likely to be classified as a luxury good? Clubs Hears Cheques