For inferior commodities, income effect is
A. Zero
B. Negative
C. Infinite
D. Positive
Answer: Option B
Solution(By Examveda Team)
For inferior commodities, income effect is Negative. When price of an inferior good falls, its negative income effect will tend to reduce the quantity purchased, while the substitution effect will tend to increase the quantity purchased.Join The Discussion
Comments ( 1 )
The capital that is consumed by an economy or a firm in the production process is known as
A. Capital loss
B. Production cost
C. Dead-weight loss
D. Depreciation
Who propounded the opportunity cost theory of international trade?
A. Ricardo
B. Marshall
C. Heckscher & Ohlin
D. Haberler
Which among the following statement is INCORRECT?
A. On a linear demand curve, all the five forms of elasticity can be depicted
B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.
C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.
D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.
A. Increase
B. Decrease
C. Remain the same
D. Become zero
Substitution effect dominates income effect of inferior good, that's why price effect is negative in inferior good, thus income effect is positive