A Save Question 3 2 points whether her cakes are normal or i

A Save Question 3 (2 points) whether her cakes are normal or interior. You realize the answer to this question depends on determining her Candace Cakery asks you rco e elast at t demand Based on data colected, you found that a 5% increase in incomes w! resutin a 2% decrease n sales Therefore, tesign ofthe income elasticity of demand is-and her pes are considered VO1) Negative, interior 2) Positive, interor 0 3) Positve, normal 4) Negative.normal 8 0 ctri

Solution

Income Elasticity of demand = % change in quantity demanded / % change in income = - 2 / 5 = - 0.4

Negative income Ed means good is inferior in nature.

Answer is: 1) Negative ; Inferior