State with reasons whether you agtae or disagree with the following st

1.	State with reasons whether you agtae or disagree with the following statements:The Income Elasticity of Demand is only positive.
Answer» No, I do not agree with this statements. 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.

State with reasons whether you agtae or disagree with the following statements:The Income Elasticity of Demand is only positive.

Answer»

No, I do not agree with this statements.

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.