Asked by Lauren Lawlor on Jul 24, 2024
Verified
If a decrease in income results in an increase 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 quantity demanded of a good or service changes in response to a change in consumers' income.
Inferior Good
A type of good whose demand decreases when consumer income rises, unlike normal goods, which see an increase in demand with rising income.
- Discern the differentiation between normal and inferior goods by examining income elasticity figures.
Verified Answer
SP
Stephany Peraza MolinaJul 29, 2024
Final Answer :
D
Explanation :
If a decrease in income leads to an increase in the quantity demanded, the product is considered an inferior good. This is because consumers turn to cheaper alternatives when their income decreases. The income elasticity of demand for inferior goods is negative, indicating that demand moves inversely to income changes.
Learning Objectives
- Discern the differentiation between normal and inferior goods by examining income elasticity figures.
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