Question

# 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.

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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