单选题 If quantity demanded declines 20 percent when incomes fall 3 percent, this good is:

A. a luxury good.
B. a necessity.
C. an inferior good.

【正确答案】 A

【答案解析】Income elasticity is the sensitivity of demand to changes in consumer income. Income elasticity for this good = (percent change in quantity demanded)/(percent change in income)=-20/-3=6.7. Normal goods with high income elasticities (absolute values＞1) are considered luxury goods, a type of normal good that experiences a greater percentage increase in demand than the percentage increase in income.