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Economics (AS & A Level) · May / June 2025 · Paper 13 · Question 9

9708Price elasticity, income elasticity and cross elasticity of demand

What is true for income elasticity of demand but not for price elasticity of demand?

  1. AIt helps firms differentiate between goods with elastic and inelastic demand.
  2. BIt helps firms differentiate between normal and inferior goods.
  3. CIt helps firms predict the changes in the quantity demanded.
  4. DIt helps firms predict the changes in sales revenues.

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Correct answer: B. It helps firms differentiate between normal and inferior goods.

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