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Question

Income elasticity of demand for inferior goods is____ .

A
positive
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B
negative
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C
zero
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D
greater than one
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Solution

The correct option is B negative
Income elasticity of demand is the change in the quantity demanded of a commodity with respect to the percentage change in the income. The demand for inferior goods rises when the real income of consumers falls and vice versa. Hence, income elasticity of demand for inferior goods is negative.

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