If the income elasticity of demand for a good is negative, this means that:
A) only the poor will buy the good.
B) as incomes fall, less will be spent on the good.
C) as incomes rise, the demand for the good will fall.
D) the good does not obey the law of demand.

Question

Quizplus · Accepted Answer

A negative income elasticity of demand means that as incomes rise, the demand for the good falls. This is because the good is considered inferior, meaning that as consumers' incomes increase, they switch to superior goods and the demand for the inferior good decreases.

If the Income Elasticity of Demand for a Good Is