Question

If Yεd = (+) 1.3, then the good is …

(a) a normal good, that is inelastic.
(b) an inferior good, that is elastic.
(c) a normal good, that is elastic.
(d) an inferior good, that is inelastic.
(e) none of the above.

Answer 1

The good in question is a normal good with an income elasticity of 1.3, indicating that it is elastic.

Step-by-step explanation:

Based on the given information, the good in question is a normal good with an income elasticity of 1.3. Normal goods are those that have a positive income elasticity, meaning that an increase in income leads to an increase in the quantity demanded. The income elasticity of 1.3 indicates that the demand for the good is elastic, as it is greater than 1.

Therefore, the correct option is (c) a normal good, that is elastic.