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33. the income elasticity of demand for luxury goods is generally (2) (4 negative (1) less than one equal to one 3 positive (1) (3 th5 e (2) (4) tfh5 b 34. if t
33. The income elasticity of demand for Luxury goods is generally (2) (4 negative (1) less than one equal to one 3 positive (1) (3 TH5 E (2) (4) TFH5 B 34. If the demand curve is a rectangular hyperbola, the eleasticity would be equal to: (1 0.25 (4) (2) 0.50 (3) 0.75 1.00 35. For what types of goods the income effect and the substitution effect work in same direction ? (31 Oniy luxury goods 2) Inferior goods (4) Only comfort goods () Superior goods
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Nidhi taparia Best Answer
34. On a rectangular hyperbola demand curve, elasticity at all points is equal to one. This is because elasticity as per one method, is measured by taking the area below the curve. In such a curve, it is always constant. Hence it is unitary elastic.
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Nidhi taparia
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33. While among these the option (3) is correct, but actually income elasticity of demand in case of luxuries is positive as well as greater than one. What that means is two things - One, if income rises, our consumption of luxury goods also does. Vice versa in case of fall in income. This explains the positive elasticity quotient. Two, the consumption of luxury items rises more than the rise in income, and it falls more than the fall in income. This explains the greater than one elasticity quotient.
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Nidhi taparia
35. The income and substitution effects work in the same direction in the case of normal goods. None of the options seem to be correct in this regard.