Asked by abdullah Mohammed on May 10, 2024
Verified
A negative income elasticity of demand coefficient indicates that
A) the product is an inferior good.
B) the product follows the law of demand.
C) the product is a complementary good.
D) the product is a substitute good.
Negative Income Elasticity
A condition where the demand for a good decreases as the income of the consumer increases.
Inferior Good
A type of product whose demand decreases when the income of consumers increases and vice versa.
Demand Coefficient
A measure that indicates the sensitivity or responsiveness of the quantity demanded of a good or service to changes in its price.
- Gain insight into the nature of normal and inferior goods and the way changes in income influence these categories.
Verified Answer
GM
Giuseppe MaggioMay 14, 2024
Final Answer :
A
Explanation :
A negative income elasticity of demand indicates that as income increases, the demand for the product decreases, which is characteristic of an inferior good.
Learning Objectives
- Gain insight into the nature of normal and inferior goods and the way changes in income influence these categories.