Suppose the consumer's income elasticity for good is -0.10 when monthly income is $1,000,and the consumer's income elasticity for good is 0.10 when monthly income is $2,000.From this information we can infer that
A) good is an inferior good for low levels of income and a superior good for high levels of income.
B) good is a normal good for low levels of income and an inferior good for high levels of income.
C) good in an inferior good for low levels of income and a normal good for high levels of income.
D) good is a Giffen good.

Question

Suppose the consumer's income elasticity for good  is -0.10 when monthly income is $1,000,and the consumer's income elasticity for good  is 0.10 when monthly income is $2,000.From this information we can infer that
A) good is an inferior good for low levels of income and a superior good for high levels of income. 
B) good is a normal good for low levels of income and an inferior good for high levels of income. 
C) good in an inferior good for low levels of income and a normal good for high levels of income. 
D) good is a Giffen good.

Quizplus · Accepted Answer

We know that the income elasticity for good 11ea71e2_630f_0eb2_89cd_736b05645e94_TB1644_11 is negative, which means it is an inferior good. We also know that the income elasticity for good 11ea71e2_630f_35c3_89cd_7116c47e3c33_TB1644_11 is positive, which means it is a normal good. Therefore, the only option that matches these conditions is C: good 11ea71e2_630f_35c6_89cd_07fe14649194_TB1644_11 is an inferior good for low levels of income and a normal good for high levels of income.

Suppose the Consumer's Income Elasticity for Good Is -0