Answer to Question #85118 in Microeconomics for Ayanda Lubisi

Question

The income elasticity of an inferior good is …

1. negative because as people become richer, they increase their purchases of the
good by smaller and smaller amounts.
2. 1 because the increased income offsets the desire to consume less of the good
because it is inferior.
3. greater than 1 because the richer you become, the less you will consume of the
good.
4. negative because higher income leads to a reduction in the amount consumed of the
product.

Answer 1

4. negative because higher income leads to a reduction in the amount consumed of the product.