B Elasticity of Demand — Economics STD 12 Commerce / Arts — Question
Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsEconomicsB Elasticity of Demand4 Marks
Question
The Income Elasticity of Demand is only positive.
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Answer
No, I do not agree with this statement, s Income Elasticity of demand is not only positive but can also be negative or zero.
Negative Income Elasticity : Inferior goods have a negative income elasticity. As income increases the demand for inferior goods fall. There is an inverse relation s between income and quantity demanded of inferior commodity. Inferior goods are substituted by superior goods.
Zero Income Elasticity : When change in income does not have any effect on the demand for a commodity then the income elasticity is Zero – for E.g. goods like salt, pins etc.
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