Question

If income elasticity of demand for lard is (-3), this means that:

a. Lard is a substitute for butter
b. Lard is a normal good
c. Lard is an inferior good
d. None of the above

Answer 1

If the income elasticity of demand for lard is (-3), it means that lard is an inferior good.

Step-by-step explanation:

If the income elasticity of demand for lard is (-3), this means that lard is an inferior good. An inferior good is a product for which demand decreases as income increases. In this case, as income rises, people tend to purchase less lard.