CFA Practice Question

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CFA Practice Question

At price = $5, the income elasticity of good X is 0.5. This means ______

A. 0.5% of income is being spent on good X.
B. whenever income rises by 1%, the quantity demanded at price = $5 would rise by 0.5%.
C. if income rises, 0.5% of the increase would be spent on good X.
Correct Answer: B

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