Asked by Nancy Nguyen on Jul 26, 2024
Verified
If a decrease in income results in a decrease in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.
A) a normal good; positive
B) a normal good, negative
C) an inferior good; positive
D) an inferior good; negative
Income Elasticity
The responsiveness of the demand for a good to a change in an individual’s income.
Normal Good
A type of good for which demand increases as the income of the consumer increases, showing a positive correlation between income and demand.
- Comprehend the variance between normal and inferior goods via income elasticity metrics.
Verified Answer
KH
Kaija HedmanAug 01, 2024
Final Answer :
A
Explanation :
When a decrease in income leads to a decrease in the quantity demanded, the product is considered a normal good, and the income elasticity of demand is positive, indicating that demand moves in the same direction as income.
Learning Objectives
- Comprehend the variance between normal and inferior goods via income elasticity metrics.