The co-efficient of income elasticity of demand for inferior goods is
ECONOMICS
WAEC 2011
The co-efficient of income elasticity of demand for inferior goods is
- A. positive
- B. equal to one
- C. less than one
- D. negative
Correct Answer: D. negative
Explanation
A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes.
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