PRC-3 · Chapter 11 · Question 31 of 57
The Income Elasticity of Demand for a specific brand of fast food is calculated to be -0.6. Based on this negative coefficient, how is this fast food classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) As an inferior good
Explanation
A negative income elasticity of demand indicates that as consumers' incomes rise, they buy less of the product, which defines an inferior good.
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