Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative,zero,or positive values.

Question

Quizplus · Accepted Answer

The income elasticity of demand can be positive for normal goods, negative for inferior goods, or zero for necessities. The cross-price elasticity of demand can be positive for substitute goods, negative for complementary goods, or zero when there is no relationship between the two goods. Therefore, both coefficients can take on negative, zero or positive values.

Both the Income Elasticity of Demand and the Cross-Price Elasticity