ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -A normal good is one whose demand increases when people’s incomes start to increase, giving it a positive income elasticity of demand. Inferior goods are associated with a negative income elasticity, while normal goods are related to a positive income elasticity.
Detailed explanation-2: -A “normal good” is a good where, when an individual’s income rises, they buy more of that good. An “inferior good” is a good where, when the individual’s income rises they buy less of that good. It is important to note that all other variables are held constant (i.e. “ceteris paribus").
Detailed explanation-3: -Answer and Explanation: For a normal good, when income increases, the demand for a good increases and when income drops, demand drops.
Detailed explanation-4: -The statement is false. Inferior goods are defined as types of goods whereby their demand decreases when the consumers’ income increases.