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27 January, 22:03

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is a. negative, and the good is an inferior good. b. positive, and the good is an inferior good. c. positive, and the good is a normal good. d. negative, and the good is a normal good.

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  1. 27 January, 22:23
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    Answer: The correct answer is "a. negative, and the good is an inferior good.".

    Explanation: Assuming that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good, the income elasticity of demand for the good is negative because the good is an inferior good.

    Inferior goods are those material elements that are related to the consumption of people who have lower incomes and who cover their basic needs.

    Its income elasticity coefficient is negative. Therefore, when the consumer's income increases, the demand for these goods decreases because the consumer can choose other higher quality products ...
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