Asked by Jocelyn Cooperwood on Jul 14, 2024
Verified
If an increase in income results in a decrease in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.
A) a normal good; positive
B) a normal good, negative
C) an inferior good; positive
D) an inferior good; negative
Income Elasticity
A measure of how much the demand for a good or service changes in response to changes in consumer income.
Inferior Good
is a type of good whose demand decreases when the income of consumers increases, contrary to what is observed with normal goods.
- Recognize the difference between normal and inferior goods based on income elasticity values.
Verified Answer
RE
Rossie EspinoJul 18, 2024
Final Answer :
D
Explanation :
If an increase in income leads to a decrease in the quantity demanded for a product, the product is classified as an inferior good. This is because consumers opt for higher-quality or more expensive alternatives as their income increases. The value of the income elasticity of demand for inferior goods is negative, reflecting the inverse relationship between income levels and demand for these goods.
Learning Objectives
- Recognize the difference between normal and inferior goods based on income elasticity values.
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