If Bus Travel Is an Inferior Good, Then Its Income

question 77

Multiple Choice

If bus travel is an inferior good, then its income elasticity of demand will be

• A) strictly greater than one.
• B) positive.
• C) equal to zero.
• D) negative.

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Definitions:

Comparative Advantage

A situation in which a person or country can produce a specific product at a lower opportunity cost than some other person or country; the basis for specialization and trade.

Utility-Maximizing

The economic principle that individuals or firms seek to get the greatest satisfaction or profit from their resource choices.

Utility

The satisfaction or benefit derived from consuming goods or services.

Consumer Wants

Desires or needs that individuals seek to satisfy through the purchase of goods or services.