Goods whose income elasticities are negative are called

Goods whose income elasticities are negative are called

• A. Normal good.
• B. Inferior good.
• C. Superior good.
• D. Complements.

Answer: (B)

Income elasticity of demand shows how much quantity demanded changes as income changes. When this elasticity is negative, demand falls as income rises. That pattern identifies an inferior good: people buy less of it as they can afford better alternatives and substitute up to higher-quality goods. For example, inexpensive staples or discounted goods often see demand decline when incomes improve, because households shift toward more desirable options. By contrast, normal goods have positive income elasticity—demand increases with income—while luxury or superior goods also have positive elasticity, typically larger. Complements relate to how the quantity demanded of one good responds to the price of another good, not to income.

Income elasticity of demand shows how much quantity demanded changes as income changes. When this elasticity is negative, demand falls as income rises. That pattern identifies an inferior good: people buy less of it as they can afford better alternatives and substitute up to higher-quality goods. For example, inexpensive staples or discounted goods often see demand decline when incomes improve, because households shift toward more desirable options. By contrast, normal goods have positive income elasticity—demand increases with income—while luxury or superior goods also have positive elasticity, typically larger. Complements relate to how the quantity demanded of one good responds to the price of another good, not to income.