Answer to Question #63624 in Microeconomics for Tahir

Question

Income elasticity of demand for an inferior good is ?

Answer 1

The income elasticity of demand indicates the change in a consumption of a particular good as the person’s income increases.
The income elasticity of demand = % change in consumption / % change in income.
The consumption of some goods in fact falls as income rises and grows as income reduces. This is actually inferior goods. Their income elasticity is negative.