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In: Economics

Complete the following sentence. ​If, as Paula's income increases​, her demand for hot dogs decreases​, then...

Complete the following sentence. ​If, as Paula's income increases​, her demand for hot dogs decreases​, then for Paula​, hot dogs are ​_______. A. a substitute B. a complement C. an inferior good D. a normal good

Solutions

Expert Solution

Option C is correct

Inferior good has a negative income elasticity which indicates that whenever there is an increase in the income of the consumer, the demand for such a good decreases. In this case also the demand for hot dogs decrease is when the income of Paula increases. Therefore hotdogs are inferior good.

Rahul Sunny answered 2 years ago
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