Assume that a 9 percent increase in income across the economy produces a 6 percent decrease in the quantity demanded of good X. The coefficient of income elasticity of demand is
A)positive, and therefore X is a normal good.
B)negative, and therefore X is a normal good.
C)positive, and therefore X is an inferior good.
D)negative, and therefore X is an inferior good.

Question

Quizplus · Accepted Answer

The coefficient of income elasticity of demand is negative, indicating that as income increases, the demand for good X decreases, which classifies it as an inferior good.

Assume That a 9 Percent Increase in Income Across the Economy