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For an inferior good with a downward sloping demand curve:
- a)The price elasticity of demand is negative; the income elasticity of demand is negative.
- b)The price elasticity of demand is positive; the income elasticity of demand is negative.
- c)The price elasticity of demand is negative; the income elasticity of demand is positive.
- d)The price elasticity of demand is positive; the income elasticity of demand is positive.
Correct answer is option 'A'. Can you explain this answer?
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For an inferior good with a downward sloping demand curve:a)The price ...
For an inferior good demand falls as income increases. The quantity demanded falls as price increases; this means the income elasticity and the price elasticity will both be negative.
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For an inferior good with a downward sloping demand curve:a)The price ...
Explanation:
Inferior goods are those goods whose demand decreases as consumer income increases. Examples of inferior goods are low-quality goods, public transport, and fast food.
Downward sloping demand curve: The demand curve for inferior goods is downward sloping, which means that as the price of the good increases, the quantity demanded decreases.
Price elasticity of demand: The price elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good. In the case of an inferior good with a downward sloping demand curve, the price elasticity of demand is negative. This means that as the price of the good increases, the quantity demanded decreases, and vice versa. The negative sign indicates an inverse relationship between price and quantity demanded.
Income elasticity of demand: The income elasticity of demand measures the responsiveness of quantity demanded to a change in consumer income. In the case of an inferior good with a downward sloping demand curve, the income elasticity of demand is negative. This means that as consumer income increases, the quantity demanded of the good decreases, and vice versa. The negative sign indicates an inverse relationship between income and quantity demanded.
Conclusion:
Option 'A' is the correct answer because the price elasticity of demand and income elasticity of demand for an inferior good with a downward sloping demand curve are both negative.
Inferior goods are those goods whose demand decreases as consumer income increases. Examples of inferior goods are low-quality goods, public transport, and fast food.
Downward sloping demand curve: The demand curve for inferior goods is downward sloping, which means that as the price of the good increases, the quantity demanded decreases.
Price elasticity of demand: The price elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good. In the case of an inferior good with a downward sloping demand curve, the price elasticity of demand is negative. This means that as the price of the good increases, the quantity demanded decreases, and vice versa. The negative sign indicates an inverse relationship between price and quantity demanded.
Income elasticity of demand: The income elasticity of demand measures the responsiveness of quantity demanded to a change in consumer income. In the case of an inferior good with a downward sloping demand curve, the income elasticity of demand is negative. This means that as consumer income increases, the quantity demanded of the good decreases, and vice versa. The negative sign indicates an inverse relationship between income and quantity demanded.
Conclusion:
Option 'A' is the correct answer because the price elasticity of demand and income elasticity of demand for an inferior good with a downward sloping demand curve are both negative.
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For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer?
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For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer?.
For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For an inferior good with a downward sloping demand curve:a)The price elasticity of demand is negative; the income elasticity of demand is negative.b)The price elasticity of demand is positive; the income elasticity of demand is negative.c)The price elasticity of demand is negative; the income elasticity of demand is positive.d)The price elasticity of demand is positive; the income elasticity of demand is positive.Correct answer is option 'A'. Can you explain this answer?.
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