Economics (AS & A Level) · Oct / Nov 2021 · Paper 31 · Question 10
9708Price elasticity, income elasticity and cross elasticity of demand
What is the most likely combination of income elasticity of demand and price elasticity of demand that explains why a firm can make higher profits in specialised luxury product markets?
- Ahigh income elasticity of demand, high price elasticity of demand
- Bhigh income elasticity of demand, low price elasticity of demand
- Clow income elasticity of demand, high price elasticity of demand
- Dlow income elasticity of demand, low price elasticity of demand
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Correct answer: B. high income elasticity of demand, low price elasticity of demand
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