Answer to Question #221318 in Microeconomics for Lebogang

Question

You are told that cabbage is an inferior good. This implies that

A. the income elasticity is infinity.
B. the income elasticity will be negative.
C. the income elasticity will be greater than 1.
C. the income elasticity is greater than 0 but less than 1.

Answer 1

CORRECT ANSWER: B. the income elasticity will be negative.

Inferior goods have a negative income elasticity. i.e., when the income of the onsumer increases, fewer inferior goods are consumed.