If the income elasticity of demand for good X is greater than 0, but less than 1, then:

Question

Quizplus · Accepted Answer

If the income elasticity of demand for a good is greater than 0, it means that the quantity demanded of that good increases as income increases (i.e. it is a normal good). However, if the income elasticity of demand is less than 1, it means that the percentage change in quantity demanded is less than the percentage change in income. This indicates that the good is a necessity rather than a luxury or superior good. Therefore, the only possible answer is A) X is a normal but not superior good.

If the Income Elasticity of Demand for Good X Is