What does it mean if an income elasticity coefficient is negative?

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1169341

2026-05-18 17:35

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A negative income elasticity coefficient indicates that the demand for a good decreases as consumer income rises, classifying it as an inferior good. In this case, as people have more disposable income, they tend to buy less of that good, opting for higher-quality or more desirable alternatives. This contrasts with normal goods, which have a positive income elasticity, meaning demand increases with rising income.

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