When her income increased from $30,000 to $40,000,Toby's consumption of macaroni decreased from 8 kilograms to 6 kilograms and her consumption of soy burgers increased from 3 kilograms to 4 kilograms.What can we conclude for Toby
A)Macaroni and soy burgers are both normal goods with income elasticities equal to 1.
B)Macaroni is an inferior good and soy burgers are normal goods; both have income elasticities of 1.
C)Macaroni is an inferior good with an income elasticity of -1, and soy burgers are normal goods with an income elasticity of 1.
D)Macaroni and soy burgers are both inferior goods with income elasticities equal to -1.

Question

Quizplus · Accepted Answer

The decrease in consumption of macaroni when the income increased suggests that macaroni is an inferior good (negative income elasticity). The increase in consumption of soy burgers suggests that it is a normal good (positive income elasticity). Therefore, the correct option is C, where macaroni is an inferior good with an income elasticity of -1, and soy burgers are normal goods with an income elasticity of 1.

When Her Income Increased from $30,000 to $40,000,Toby's Consumption of Macaroni