A O Income B Income 0 Quantity of B o Quantity of E Demanded

(A) O Income (B) Income 0 Quantity of B o Quantity of E Demanded (D) Demanded Refer to the diagrams. In which case would the coefficient of income elasticity be negative? O D

Solution

B is answer

Negative income elasticity means as th eincome increases the quantity demanded decreases.In Figure B we can see that the income elasticity is negative.