Price Elasticity of Demand measures the extent to which the quantity demanded of a good or service changes when the price of the good or service changes, ceteris paribus.

Income Elasticity of Demand measures the extent to which the quantity demanded of a good or service changes when the income changes, ceteris paribus.

Answer the following 5 questions.

1. Pick a business that you know something about or can find information on. Briefly describe the business and its main product or service.
2. Specify the product (described in 1) as luxury or necessity.
3. Specify price elasticity of demand for the product (described in 1) as elastic or inelastic. Briefly explain why.
4. Specify Income elasticity of the product (described in 1) as greater than zero or smaller than zero. Briefly explain why.
5. Based on your answer to 4, specify your product as Normal or Inferior. Briefly explain why.