9a. The income elasticity of demand for movies is estimated at +3.4. What would

Question

9a. The income elasticity of demand for movies is estimated at +3.4. What would you expect to happen to movie revenues when incomes are rising? When incomes are falling? Are movies a normal or inferior good?
b. The income elasticity of demand for clothing is estimated at +0.5. What would you expect to happen to clothing revenues when incomes are rising? When incomes are falling? Is the effect stronger or weaker than the movie industry results? Are clothes a normal or inferior good?
c. If long distance bus travel has an income elasticity of demand of -0.8, what do you expect to happen to revenues in this industry when incomes are falling (as in a recession)? Is this bus travel a normal or inferior good?

Explanation / Answer

9a going up going down normal 9b going up going down normal going up inferior.

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