Question

Assume that as your income increases, your consumption of burgers decreases. We can assume that your income elasticity of demand for burgers is what?a. Between 0 and 1b. Greater than 1c. Equal to 1d. Negative

Answer 1

Answer: Option (d) is correct.

Step-by-step explanation:

Here, Income elasticity of demand for burger is negative because burger is considered as inferior good for this person. There is a inverse relationship between the income of an individual and demand for a inferior good which means that as the income of a consumer increases, as a result demand for inferior good decreases whereas demand for normal good increases with increased income level. Income elasticity of demand for normal good is positive.