7. Using the income elasticity of demand to characterize goodsData collected from the economy of Pokerville reveals that a 14% decrease in income leads to the following changes:• An 11% increase in the quantity of clubs demanded• A 2% decrease in the quantity of chips demanded• A 27% decrease in the quantity of diamonds demandedCompute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, basedon its income elasticity, indicate whether each good is a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change.The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.)GoodIncome Elasticity of DemandNormal or Inferior GoodClubsChipsDiamondsWhich of the following three goods is most likely to be classified as a luxury good?FnyPPCI Homework (Ch 05)• An 11% increase in the quantity of clubs demanded• A 2% decrease in the quantity of chips demanded• A 27% decrease in the quantity of diamonds demandedCompute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, basedon its income elasticity, indicate whether each good is a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change.The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.)GoodIncome Elasticity of Demand Normal or Inferior GoodClubsChipsDiamondsWhich of the following three goods is most likely to be classified as a luxury good?O ClubsO DiamondsO Chips57°FSunny

In economics, income elasticity is a measure of how responsive the demand for a good or service is…

7. Using the income elasticity of demand to characterize goods Data collected from the economy of Pokerville reveals that a 14% decrease in income leads to the following changes: • An 11% increase in the quantity of clubs demanded • A 2% decrease in the quantity of chips demanded • A 27% decrease in the quantity of diamonds demanded Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on its income elasticity, indicate whether each good is a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.) Income Flasticity of Demand Normal or Inferior Good