In the nation of Transporta,the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent,
A)the quantity of used cars demanded increase by 26.6 percent.
B)used cars will be normal goods.
C)the quantity of used cars demanded decrease by 26.6 percent.
D)the demand curve for used cars shifts rightward.
E)the supply curve of used cars shifts rightward.

Question

Quizplus · Accepted Answer

The negative sign of income elasticity of demand for used cars (-2.66) indicates that used cars are an inferior good in Transporta. Therefore, when incomes increase by 10 percent, the quantity of used cars demanded will decrease by 26.6 percent.

In the Nation of Transporta,the Income Elasticity of Demand for Used