If a product's income elasticity is - 3.4, then we can conclude that
A) an increase in income will lead to an increase in demand for the product.
B) the product is a normal good.
C) the product is certainly a necessity.
D) the product has a rising income- consumption curve.
E) a decrease in income will lead to an increase in demand for the product.

Question

Quizplus · Accepted Answer

A negative income elasticity coefficient indicates that the product is an inferior good, meaning that as income decreases, demand for the product increases. Therefore, an decrease in income will lead to an increase in demand for the product.

If a Product's Income Elasticity Is - 3