The correct answer is C. Negative.
Income elasticity of demand is a measure of how much the demand for a good or service changes in response to a change in income. A good or service is considered an inferior good if its demand decreases as income increases. This is because consumers tend to substitute away from inferior goods as they become wealthier. For example, as people earn more money, they may choose to eat out at restaurants more often instead of cooking at home. This would lead to a decrease in the demand for groceries, which is an inferior good.
The income elasticity of demand for an inferior good is always negative. This means that the demand for an inferior good will decrease as income increases. The magnitude of the negative income elasticity of demand will depend on the specific good or service. Some inferior goods have a very high negative income elasticity of demand, while others have a relatively low negative income elasticity of demand.
Here are some examples of inferior goods:
- Cheap food
- Public transportation
- Used cars
- Discount stores
It is important to note that not all goods are inferior goods. Some goods, such as luxury goods, have a positive income elasticity of demand. This means that the demand for luxury goods will increase as income increases.