If a product's income elasticity of demand is - 1.7, then we can conclude that
A) the product is certainly a necessity.
B) a decrease in income will lead to an increase in demand for the product.
C) an increase in income will lead to an increase in demand for the product.
D) the product is a normal good.
E) the product is a luxury good.

Question

Quizplus · Accepted Answer

A negative income elasticity of demand indicates that the product is an inferior good, meaning that demand for the product increases as income decreases.

If a Product's Income Elasticity of Demand Is - 1