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    Question

    Income elasticity of an inferior good is

    always
    A Negative Correct Answer Incorrect Answer
    B Above unity Correct Answer Incorrect Answer
    C Between 0 and unity Correct Answer Incorrect Answer
    D Between (-4,4) Correct Answer Incorrect Answer
    E In the closed interval [-1,1] Correct Answer Incorrect Answer

    Solution

    An inferior good is one whose demand drops when people's incomes rise. So, income elasticity of an inferior good is always negative.

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