Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

Over the last few years, downloading music onto computers and other electronic devices has become more popular, replacing other methods of buying music, for example compact discs (CDs). What is likely to happen to the price and the quantity of resources allocated to each of these markets?

  • Adownloaded music market: price decrease, resources decrease; CD market: price increase, resources decrease
  • Bdownloaded music market: price decrease, resources increase; CD market: price increase, resources increase
  • Cdownloaded music market: price increase, resources decrease; CD market: price decrease, resources increase
  • Ddownloaded music market: price increase, resources increase; CD market: price decrease, resources decrease

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