If the income elasticity of demand for a good is negative it must be ?
Correct answer: B. an inferior good
- A. an elastic good
- B. an inferior good
- C. a normal good
- D. a luxury good
Explanation
A negative income elasticity means demand falls as income rises, which is the definition of an inferior good. Normal goods have positive income elasticity, while luxury goods have elasticity greater than one.
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