Suppose the income elasticity of demand for toys is +2.0. This means that:

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  1. Suppose the income elasticity of demand for toys is +2.0. This means that:
    A. A 10 percent increase in income will increase the purchase of toys by 2 percent.
    B. A 10 percent increase in income will increase the purchase of toys by 20 percent.
    C. A 10 percent increase in income will decrease the purchase of toys by 2 percent.
    D. Toys are an inferior good.

  2. If the income elasticity of demand for margarine is -5.00, this means that:
    A. Less margarine will be purchased when its price falls.
    B. Margarine is a substitute for butter.
    C. Margarine is a normal good.
    D. Margarine is an inferior good.