An individual gets a raise, increasing their income by 2.5%. As a result, their consumption of a certain good decreases by 1%. What is the income elasticity of demand for this good? Is this a normal good, inferior good, both or neither for this individual

An individual gets a raise, increasing their income by 2.5%. As a result, their consumption of a certain good decreases by 1%. What is the income elasticity of demand for this good? Is this a normal good, inferior good, both or neither for this individual

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 31CTQ: Economists define normal goods as having a positive income elasticity. We can divide normal goods...

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An individual gets a raise, increasing their income by 2.5%. As a result, their consumption of
a certain good decreases by 1%. What is the income elasticity of demand for this good? Is this
a normal good, inferior good, both or neither for this individual?

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