- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 12. Topics in Demand and Supply Analysis
- Subject 1. Demand Concepts
CFA Practice Question
In the demand function for inferior good x, Qx = A + B x Px + C x I + D x Py, we are certain that ______.
A. C < 0
B. B > 0
C. D < 0
Explanation: Goods with negative income elasticity are called inferior goods.
User Contributed Comments 3
| User | Comment |
|---|---|
| saadbhatty | For God sake's man where are the (BRACKETS) |
| bosher | It's pretty clear. Why would you need brackets? |
| DylanEeles | I'm guessing the value of c is the marginal propensity to consume, and the theory tested here is that an inferior good will have a negative MPC? Can someone confirm? |