Question

If my income increases by 12%, then quantity of public transportation demanded drops by 6%. I...

If my income increases by 12%, then quantity of public transportation demanded drops by 6%. I can say that income elasticity of my demand for public transportation is negative and that public transportation is a normal good?

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Answer #1

If the income increases by 12%, then quantity of public transportation demanded drops by 6%. we can say that income elasticity of demand for public transportation is negative and that public transportation is a inferior  good. because for normal and luxurious goods the income elasticity of demand is possitive and the demand increases as income increases but as in this case the demand for public transport is declining as income is increasing there is negative relationship between the two and the public transport is a inferior good.

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