The income elasticity of demand for used cars is less than zero,so used cars are
A)an inferior good.
B)a normal good.
C)an inelastic good.
D)a perfectly inelastic good.
E)a substitute good.

Question

Quizplus · Accepted Answer

A negative income elasticity of demand indicates that as income increases, the quantity demanded for the good decreases. This is characteristic of an inferior good, which is a good that consumers buy less of as their income increases and more of as their income decreases. Used cars are often seen as inferior goods, as consumers with higher incomes will typically prefer to buy new cars instead.

The Income Elasticity of Demand for Used Cars Is Less