CFA Practice Question

There are 539 practice questions for this study session.

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?
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