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17. If income elasticity of demand is negative, then an increase in income would cause a...

17. If income elasticity of demand is negative, then an increase in income would cause a rightward / leftward shift of the demand curve. This product is a _____ good. If at a constant price, an increase in consumer income from $10,000 to $15,000 caused a decrease in demand from 200 units to 130 units, then the numeric value for income elasticity is _____ .

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Answer #1

If income elasticity of demand is negative, then an increase in income would cause a leftward shift of the demand curve. This product is an inferiorgood.
Explanation: If there is a negative relation between income and demand for a good, it means that a good is inferior.

If at a constant price, an increase in consumer income from $10,000 to $15,000 caused a decrease in demand from 200 units to 130 units, then the numeric value for income elasticity is _____ .
Income Elasticity = Percentage change in quantity demanded/Percentage change in income


Percentage change in quantity demanded = (130 - 200)/200 x 100 =- 35%
Percentage change in income = (15000 - 10000)/10000 x 100 = 50%

Income elasticity = -35/50 = -0.7

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