Comparing the income effects between salt and housing,

Question

Quizplus · Accepted Answer

The income effect for housing is likely to be greater than the income effect for salt because housing is a superior good, meaning that as income increases, the demand for housing also increases at a faster rate than the increase in income. In contrast, salt is an inferior good, meaning that as income increases, the demand for salt decreases at a faster rate than the increase in income. Therefore, the income effect for housing is likely to be greater than the income effect for salt.

Comparing the Income Effects Between Salt and Housing