If a good is _______,the income effect is negative for a price increase and positive for a price decrease.
A) inferior
B) superior
C) normal
D) Giffen

Question

Quizplus · Accepted Answer

For a normal good, the income effect is negative when the price increases (leading to a decrease in quantity demanded) and positive when the price decreases (leading to an increase in quantity demanded).

If a Good Is _______,The Income Effect Is Negative for a Price