Question : In the case of inferior good , the income elasticity of demand is :
Option 1: Zero.
Option 2: Negative .
Option 3: Infinite .
Option 4: Positive .
Correct Answer: Negative .
Solution : The correct option is negative.
In economics, an inferior good is one where demand increases as consumer income falls. This is reflected in the negative value of its income elasticity of demand, which measures how responsive the quantity demanded is to changes in income. Essentially, with inferior goods, lower income leads to higher demand, creating an inverse correlation between income and demand.
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