We would expect the income elasticity of demand for steak to be positive, and that for hamburger to be negative.

Question

Quizplus · Accepted Answer

The income elasticity of demand for steak is positive because as income increases, people are more likely to buy steak, which is a luxury good. The income elasticity of demand for hamburger is negative because as income increases, people are more likely to buy steak instead of hamburger, which is a less expensive good.

We Would Expect the Income Elasticity of Demand for Steak