The income elasticity of demand for ground beef has been estimated to be -0.197.If income falls by 20 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?
A) total expenditures will rise
B) total expenditures will remain unchanged
C) total expenditures will remain fall
D) not enough information is given to answer the question

Question

Quizplus · Accepted Answer

The negative income elasticity of demand indicates that ground beef is an inferior good, meaning that as income falls, demand for it increases. A 20 percent decrease in income would lead to an increase in demand for ground beef, likely increasing total expenditures on it, assuming price and other factors remain constant.

The Income Elasticity of Demand for Ground Beef Has Been