An inferior good is best defined as a product for which the:
A) price elasticity of demand is negative.
B) income elasticity of demand is negative.
C) price elasticity of demand is zero.
D) income elasticity of demand is zero.

Question

Quizplus · Accepted Answer

An inferior good is a product for which the income elasticity of demand is negative, meaning that as a consumer's income increases, the demand for the product decreases. This is in contrast to a normal good, for which the income elasticity of demand is positive. The price elasticity of demand may also be negative for an inferior good, but that is not the defining characteristic of an inferior good.

An Inferior Good Is Best Defined as a Product for Which