If a 10 percent increase in income induced a group of consumers to reduce their yearly purchases of eggs by 5 percent, for these consumers,
A) the income elasticity of eggs equals approximately 1.05.
B) the income elasticity of eggs is 0.5.
C) eggs are a luxury good.
D) eggs are an inferior good.

Question

Quizplus · Accepted Answer

The negative income elasticity indicates that as income increases, the demand for eggs decreases, classifying eggs as an inferior good for these consumers.

If a 10 Percent Increase in Income Induced a Group