If the income elasticity of demand for a good is negative, it must be
A) an elastic good.
B) an inferior good.
C) a normal good.
D) a luxury good.

Question

Quizplus · Accepted Answer

A negative income elasticity of demand indicates that as income increases, the demand for the good decreases. This is a characteristic of inferior goods, which are cheaper alternatives to superior goods. As income increases, consumers switch to superior alternatives, causing the demand for the inferior good to decrease.

If the Income Elasticity of Demand for a Good Is