If one's demand for good X decreases as income rises, the income elasticity of demand for good X is
A) elastic.
B) inelastic.
C) unit elastic.
D) negative.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of quantity demanded to a change in income. If the demand for good X decreases as income rises, then the income elasticity of demand for X is negative. This indicates that X is an inferior good, as opposed to a normal good, for which demand would increase as income rises.

If One's Demand for Good X Decreases as Income Rises