The income elasticity of demand is
A) positive for a normal good.
B) zero for an inferior good.
C) less than one for an income elastic normal good.
D) Only answers A and B are correct.
E) Answers A, B, and C are correct.

Question

Quizplus · Accepted Answer

Income elasticity of demand is positive for a normal good, as demand increases with income. For an inferior good, income elasticity is negative, not zero. An income elastic normal good has elasticity greater than one, not less.

The Income Elasticity of Demand Is