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Basic Question 2 of 15
For inferior goods, income elasticity is ______.
B. greater than 1
C. less than 0
A. greater than 0
B. greater than 1
C. less than 0
User Contributed Comments 21
User | Comment |
---|---|
danlan | Is there any example of inferior goods? |
thedeuce | cabbage.... generic food... ramen noodles |
wroger | junk food |
gsuwp | taking the bus |
patsy | cabbage?! generally supermarket own brand produce... though some US text books give public transport as an example!! |
mansi | If you tale income elasticity to be %change in quantity demanded of inferior good/%change in income The movement of income and quantity demamned for inferior goods has an inverse relationship. so the income elsticity will be less than 0. |
amieguo | inferior good <0 nomral good 0< <1 luxury >1 |
tanyc | Is the income elasticity of normal good always between zero and one as posted by amieguo? Just to confirm.thanks. |
Rotigga | Goods from dollar stores are examples of inferior goods. |
Frehner | CFA study material |
ridone | read the question carefully! Income elasticity is in question not price elasticity of demand. |
TUFF | potatoes,public transport,etc |
mrushdi | HOW about CFA STUDY MATERIAL ??? |
endlessfin1te | CFA study material is not an inferior, you will likely comsume more if you have more income. |
shwetad | yes....bus is good...as when we have less money we take the bus thou it is time consuming....but when we have more money we may prefer a train or plane to travel as it saves time too.. |
past1sttime | I love ramen noodles |
wulin | CFA study material after the CFA exam being held. |
gill15 | should be in the next unit...question is pretty much impossible right now with what I know unless you all are super geniuses |
thekobe | a flat in the bronx for example, if you have more income you would like to get one in times square |
nabilhjeily | well when u have more money ull buy less inferior goods because basically you can afford it |
bidisha | thanks mansi |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
compare substitution and income effects;
contrast normal goods with inferior goods;
CFA® 2024 Level I Curriculum, Volume 2, Module 8.