If an increase in income results in a decrease in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.
A) a normal good; positive
B) a normal good, negative
C) an inferior good; positive
D) an inferior good; negative

Question

Quizplus · Accepted Answer

If an increase in income leads to a decrease in the quantity demanded for a product, the product is classified as an inferior good. This is because consumers opt for higher-quality or more expensive alternatives as their income increases. The value of the income elasticity of demand for inferior goods is negative, reflecting the inverse relationship between income levels and demand for these goods.

If an Increase in Income Results in a Decrease in the Quantity