The uploaded question does not contain the options. The full question with the options is shown below.
Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are
A) a normal good with a price elasticity of demand of 0.5.
B) a substitute good with a cross elasticity of 0.5.
C) a good with a price elasticity of supply of -0.5.
D) an inferior good with an income elasticity of -0.5.
E) an inferior good with an income elasticity of -2.0.
Answer:
D) An inferior good with an income elasticity of -0.5
Step-by-step explanation:
Income elasticity is calculated by finding the negative 50% change in demand.
Income elasticity = -0.5
The reduction in demand for Ramen noodles due to the increase in income indicates that Ramen noodle is an inferior good that was only purchased because of Joe's meager income.
