You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:
A)is a normal good.
B)has inelastic demand.
C)is not in equilibrium.
D)is an inferior good.

Question

Quizplus · Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For inferior goods,an increase in income leads to a decrease in consumption.When the changes are in the opposite directions,the sign on elasticity is negative.

You Have Found Data That Indicates That the Income Elasticity