Question：The income elasticity of demand for a product is high. This means that:
 
　　A. The good is inferior good
 
　　B. Sales will rise sharply when incomes of households rise
 
　　C. Sales will increase sharply if the price is reduced
 
　　D. Sales will fall only slightly when incomes of households fall
 
　　The correct answer is: Sales will rise sharply when incomes of households rise
 
　　The income elasticity of demand measures the responsiveness of demand to changes in consumers' incomes. An 'inferior' good has a negative income elasticity: as incomes fall, more is bought.

 
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