Question

The income elasticity of the demand coefficient is for normal goods. Choose one:A. equal to zeroB. less than zero C. greater than zero D. sometimes greater than zero and sometimes less than zero

Answer 1

Answer:

D. sometimes less than zero and sometimes greater than zero.

Step-by-step explanation:

The income elasticity of demand is the responsiveness of the increase in the consumers income versus the quantity of goods and services demanded in an economy. we have five types of income elasticity of demand which are namely high elasticity, unitary elasticity, low elasticity and negative elasticity.

in high elasticity of demand when income rises then we see a much bigger increase in the quantity of goods and services demanded therefore positive coefficient.

The unitary elasticity of demand is when the income increases at the same rate the quantity of goods and services demanded rises therefore a coefficient is constant.

the low elasticity of demand is when income increases at a lower rate than the increase in the quantity demanded. positive but low coefficient.

The negative elasticity of demand is when an income increases and the quantity decreases therefore a negative coefficient is seen.