ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the case of inferior goods, the income elasticity of demand is negative as when the income of the consumer rises the demand for inferior good falls and when the income of the consumer falls, then the demand for inferior good rises.

Detailed explanation-2: -Inferior goods have a negative income elasticity of demand; as consumers’ income rises, they buy fewer inferior goods. A typical example of such a type of product is margarine, which is much cheaper than butter.

Detailed explanation-3: -Income elasticity of demand for inferior goods is negative.

Detailed explanation-4: -The income elasticity of demand for an inferior good is negative. For most goods, the income elasticity of demand is negative. The cross-price elasticity of demand for two goods is negative if the goods are substitutes.

Detailed explanation-5: -In case of inferior goods, the income effect is negative, although the substitution effect is positive-this statement is true as the income of the consumer rises, the demand for inferior good falls.