Good M has an income elasticity of demand of -0.7. Which of the following items is good M?
A)bologna
B)organic eggs
C)cruise line tickets
D)designer handbags

Question

Quizplus · Accepted Answer

Good M, with an income elasticity of demand of -0.7, is an inferior good because the income elasticity is negative. This means that as income increases, the demand for the good decreases. Among the options provided, bologna is the most likely to be considered an inferior good, as it is a lower-cost food item that people might substitute for a higher-quality alternative when their income increases.

Good M Has an Income Elasticity of Demand of -0