The income elasticity of demand of an inferior good:
A) is less than 0.
B) is equal to 0.
C) is greater than 0.
D) could be any one of the above.

Question

Quizplus · Accepted Answer

An inferior good is a good for which demand decreases as income increases. Therefore, the income elasticity of demand of an inferior good is negative, meaning that a 1% increase in income leads to a less than 1% decrease in demand.

The Income Elasticity of Demand of an Inferior Good