Question

Some studies suggest that "tooth extraction" is an inferior good. Which measure of elasticity (price elasticity of demand, price elasticity of supply, income elasticity, or cross-price elasticity) would provide evidence to support this claim? What would we look for in this elasticity measure to determine if tooth extraction were inferior?

Short answer

To determine if tooth extraction is an inferior good, we would need to look at the income elasticity of demand. If this measure is negative, it would suggest that tooth extraction is an inferior good, as demand decreases when income increases.

Step-by-step solution

Identify the Correct Measure of Elasticity

To test whether a good is an inferior good, we would need to examine the income elasticity of demand. Income elasticity of demand measures how the quantity demanded for a good changes when a consumer's income changes.

Understand the Concept of Inferior Goods

An inferior good has a negative income elasticity of demand. This is because the quantity demanded for these goods falls as consumer income increases. In other words, these are goods that consumers purchase less of as their income increases.

Apply the Concept to the Case of Tooth Extraction

To test if tooth extraction is an inferior good, one would need to measure the income elasticity of demand for tooth extraction. If the measure is negative, this would suggest that tooth extraction is an inferior good, as demand decreases when income increases. Consumers could be opting for more expensive and possibly more effective dental treatments as their income increases, thus reducing demand for tooth extractions.