Those goods having a calculated income elasticity that is negative are called: a) producer's goods

Economics Dec 09, 2020

Those goods having a calculated income elasticity that is negative are called:

a) producer's goods.

b) durable goods.

c) inferior goods.

d) nondurable goods.

Expert Solution

C. Inferior goods

Inferior goods have negative income elasticity, which means that as the income level of consumer increases, the demand for inferior goods decreases. Some example of inferior goods is bicycle if the income of consumer increase they would prefer to more conducive vehicles such as a motorcycle. However, if the income level of consumers decreases, the demand for bicycles increases as it would be more affordable than the motorcycle.

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