A positive income elasticity indicates that demand for a good rises as consumer income falls.

Question

Quizplus · Accepted Answer

A positive income elasticity of demand means that as consumer income rises, demand for the good also rises. The opposite is true for negative income elasticity, where as consumer income rises, demand for the good decreases. A positive income elasticity indicates that demand for a good rises as consumer income rises, not falls.

A Positive Income Elasticity Indicates That Demand for a Good