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Income effects depend on the income elasticity of demand for each good that you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?
Inferior goods are those goods whose demand decreases as the income increases, whiledemand of normal good increases with increase in income. Now, if person is buying one inferiorgood then other good has to be a normal good because all the goods cannot be inferior goods,as the income of individual rises then it is not possible that consumption of all the goodsdecreases. So, the income elasticity of other good will be positive.
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Consumer Choices
Introduction
How Markets Work
Markets and Welfare
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this'll look at the following question. Kendra Bundle of foods be made up off inferior goods only the short answer is no. But think about the following. If your bundle is made up off inferior goods on Lee, what happens if your income increases? If there are only a few of your goods, and just to remind you, and if you're good, it's a good in which asked, Your income increases. You consume less of that good. So what happens if your bundles made apple falling off your goods? Then ask your income increases your decreasing your consumption of every good and your bundle, and that's impossible. If you reduce your consumption of all of your good senior bundle, there has to get least one good in which you're increasing your consumption hole of that money that you spend in that bundle has to go somewhere. So if you have and if you're good in your bundle, you must happen. Least one or more good in that bundle less well
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