ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in quantity demanded. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

Detailed explanation-2: -Normal goods have a positive income elasticity of demand, where a change in demand and a change in income move in the same direction. Income elasticity of demand measures the magnitude with which the quantity demanded changes in reaction to a change in income.

Detailed explanation-3: -Normal goods have a positive income elasticity of demand so as consumers’ income increase, there is an increase in quantity demand.

Detailed explanation-4: -The positive income elasticity of demand is when the demand for a product increases as consumer income increases. A good with a positive income elasticity of demand is called a “normal” good.

Detailed explanation-5: -There is a positive correlation between the income and demand for normal goods, that is, the changes income and demand for normal goods moves in the same direction. That is to say, that normal goods have an elastic relationship for the demand of a good with the income of the person consuming the good.