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Cross-Price and Income Elasticities

Luxuries of l...

Question

Luxuries of life often exhibit low elasticity of demand.

A

True

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B

False

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Solution

The correct option is B False
False. Luxuries of life have greater elasticity of demand. Change in their prices has a great effect on their demand. Because, the goods are not essentials of life and their purchase requires high percentage of income.

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