If a Good Is Inferior, Its Income Elasticity Will Be

question 344

Multiple Choice

If a good is inferior, its income elasticity will be

• A) 0.
• B) 1.0.
• C) negative.
• D) positive.

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Definitions:

Supply Function

A mathematical model that illustrates the relationship between the supply of a good or service and its price, holding other factors constant.

Production Function

An equation that describes the relationship between inputs and the maximum output that can be produced with those inputs.

Competitive Markets

Market structures characterized by a large number of buyers and sellers, where no single participant has the power to significantly influence prices.

Long-Run Supply Curve

A graphical representation showing the quantities of a good a supplier is willing to produce and sell at different prices over a long period, without fixed inputs.