If the income elasticity of demand for store brand macaroni and cheese is −3.00, this means that (Multiple Choice) A. store brand macaroni and cheese is a substitute for name‑brand macaroni and cheese. B. store brand macaroni and cheese is a normal good. C. store brand macaroni and cheese is an inferior good. D. more store‑brand macaroni and cheese will be purchased when its price falls.
If the income elasticity of demand for store brand macaroni and cheese is −3.00, this means that…
Share
The correct answer is C. store brand macaroni and cheese is an inferior good.
Explanation: The income elasticity of demand measures how sensitive the quantity demanded of a good is to a change in consumer income. A negative elasticity, such as -3.00, indicates that as income increases, the quantity demanded for store brand macaroni and cheese decreases. This behavior is characteristic of inferior goods, which are goods that people tend to buy less of as their incomes rise.