You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7. You should conclude that generic shampoo:
A)is a normal good.
B)has inelastic demand.
C)is below its equilibrium price.
D)is an inferior good.

Question

Quizplus · Accepted Answer

The income elasticity of demand for a good is the percentage by which quantity demanded changes in response to a one percent change in income. For inferior goods, an increase in income leads to a decrease in consumption (and a decrease in income leads to an increase in consumption), implying that the income elasticity of demand is negative.

You Have Found Data That Indicates That the Income Elasticity