Lenny buys less oatmeal for breakfast when his income rises.This means that for Lenny,
A) oatmeal is an normal good.
B) the income elasticity of demand for oatmeal is positive.
C) the income elasticity of demand for oatmeal is negative.
D) A and C are correct.

Question

Quizplus · Accepted Answer

The fact that Lenny buys less oatmeal when his income rises indicates that oatmeal is an inferior good, meaning the income elasticity of demand for oatmeal is negative. Option A is incorrect because normal goods are those whose demand increases as income rises. Option B is also incorrect because a positive income elasticity of demand would suggest that an increase in income leads to an increase in the quantity demanded of oatmeal.

Lenny Buys Less Oatmeal for Breakfast When His Income Rises