zero
negative
infinite
positive
Answer is Right!
Answer is Wrong!
The correct answer is B. negative.
An inferior good is a good that people consume less of when their income increases. This is because as people’s income increases, they can afford to buy more of the goods that they prefer, and inferior goods are not as desirable as other goods.
The income effect is the change in the quantity demanded of a good due to a change in income. For inferior goods, the income effect is negative, meaning that people demand less of the good when their income increases.
Here is a brief explanation of each option:
- Option A: zero. This is not the correct answer because the income effect is not always zero. For inferior goods, the income effect is negative.
- Option B: negative. This is the correct answer because the income effect is negative for inferior goods.
- Option C: infinite. This is not the correct answer because the income effect cannot be infinite.
- Option D: positive. This is not the correct answer because the income effect is negative for inferior goods.