Question

What do we call a good with an income elasticity less than zero?

Short answer

When elasticity is less than zero, it means that the value is negative.Inferior goods are those goods whose income elasticity is less than zero. When income increases, then the demand for goods automatically got declines.

Step-by-step solution

Commodity with income elasticity less than zero:

Inferior goods are those goods whose income elasticity is less than 0. With the rise in income, the demand for commodities decreases. It is due to the demand and income that moves in contradictory directions. Inferior goods are those goods whose elasticities are negative or less than 0.

For example, suppose the individual earns a low income, so the person buys only potatoes to eat. When the income rises, the individual buys meat, and the demand for potatoes falls.