The income elasticity of demand is
A) positive for a normal good and negative for an inferior good.
B) always positive.
C) negative for a normal good and positive for an inferior good.
D) always negative.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures how the quantity demanded of a good changes as consumer income changes. For normal goods, this elasticity is positive, meaning that as income increases, demand for the good increases. For inferior goods, the elasticity is negative, indicating that as income increases, demand for the good decreases.

The Income Elasticity of Demand Is