If the income elasticity of a good is − 1.8, this means this good is a(n):
A) luxury good.
B) substitute good.
C) complementary good.
D) inferior good.

Name: If the income elasticity of a good is − 1.8, this means this good is a(n): A) luxury good. B) substitute good. C) complementary good. D) inferior good.
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Question

Quizplus · Accepted Answer

A negative income elasticity of demand (less than 0) indicates that the good is an inferior good, meaning that as income increases, demand for the good decreases.

If the Income Elasticity of a Good Is − 1