Last year, Joan bought 50 kilograms of hamburger when her household income was $40 000.This year, her household income was only $30 000 and Joan bought 60 kilograms of hamburger.Holding everything else constant, Joan's income elasticity of demand for hamburger is:
A)positive, so Joan considers hamburger to be an inferior good.
B)negative, so Joan considers hamburger to be an inferior good.
C)positive, so Joan considers hamburger to be a normal good and a necessity.
D)negative, so Joan considers hamburger to be a normal good.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of quantity demanded to changes in income, holding everything else constant. If the income elasticity of demand is negative, it means that as income decreases, the quantity demanded of the good increases, indicating that the good is an inferior good. In Joan's case, when her income decreased from $40,000 to $30,000, she increased her consumption of hamburgers from 50 kg to 60 kg, indicating that hamburgers are an inferior good for Joan. Therefore, the correct answer is B.

Last Year, Joan Bought 50 Kilograms of Hamburger When Her