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Question
Income elasticity of demand for inferior goods is negative.
Income elasticity of demand for inferior goods is negative.
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Solution
The correct option is A True
Negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
Examples include the demand
for cigarettes, air conditioner and the demand for
council-owned properties.
Negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
Examples include the demand
for cigarettes, air conditioner and the demand for
council-owned properties.
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