Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe,Ramen noodles are

Question

Quizplus · Accepted Answer

Since Joe decreased his consumption of Ramen noodles as a result of an increase in income, it can be inferred that Ramen noodles are an inferior good to Joe. Furthermore, the negative income elasticity of -0.5 indicates that a 20% increase in Joe's income led to a 10% decrease in the quantity demanded of Ramen noodles, which is consistent with the definition of an inferior good.

Joe Receives a 20 Percent Increase in His Income from His