If income elasticity of demand is 1.5, how does its quantity demanded respond to an increase in income?

• A. Quantity demanded increases by a smaller amount than the income increase (a normal good).
• B. Quantity demanded increases by the same amount as the income increase.
• C. Quantity demanded increases by more than the income increase (a normal luxury good).
• D. Quantity demanded decreases as income increases.

Answer: (C)