For an inferior good, income elasticity of demand will be:
A) negative.
B) positive.
C) zero.
D) determined by the direction of the change in income.

Question

Quizplus · Accepted Answer

For an inferior good, income elasticity of demand will be negative. This means that as income increases, the demand for the good decreases. This is because people will generally choose to buy better quality, more expensive goods when they have higher incomes, and therefore demand less of the inferior good.

For an Inferior Good, Income Elasticity of Demand Will Be