If the income elasticity of demand for a good is -1.5 that good is A. A...
If the income elasticity of demand for a good is -1.5 that good is
A. A substitute to another good.
B. A complement to another good.
C. A normal good.
D. An inferior good.
E. A necessity good.
Homework Answers
Answer
Option D
D. An inferior good.
An inferior good demand has an inverse relationship with income. the elasticity is negative means the increase in income decreases demand and vice verse.
A substitute good has positive cross price elasticity
A complement good has negative cross price elasticity
A normal good has a positive income elasticity
A necessity has positive less than 1 elasticity
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