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In case of an inferior good, the income elasticity of demand is
- a)Positive
- b)Negative
- c)Zero
- d)Infinite
Correct answer is option 'B'. Can you explain this answer?
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In case of an inferior good, the income elasticity of demand isa)Posit...
Inferior goods are those goods which have a positive relation between price and quantity demanded . let the price of good increased from 9 to 10 rs , obviously there will be an increament quantity demanded, suppose it incresed from 10 units to 12 units .so here is price elasticity of demand = -(% change in quantity demanded/% change in price ) = -{ [(12-10)÷10] / [(10-9)÷9]. = -(9/5) is our answer and negative. so we can conclude that as price and quantity demanded have some positive relation in case of inferior goods that's why elasticity of demand has a negative answer.
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In case of an inferior good, the income elasticity of demand isa)Positiveb)Negativec)Zerod)InfiniteCorrect answer is option 'B'. Can you explain this answer?
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