Final answer:
Goods with more volatile demand are sensitive to changes in income levels, with normal goods seeing increased demand as income rises, and inferior goods seeing demand decrease. Factors such as preferences and price elasticity also play significant roles in the volatility of demand for these goods.
Step-by-step explanation:
Goods with more volatile demand compared to goods for which demand is stable over time tend to react more to changes in income levels and other factors. A normal good is a product whose demand increases as income rises, and decreases when income falls. Conversely, an inferior good sees demand fall when income rises. Factors like higher income levels increase the demand for luxury items such as luxury cars, vacations in Europe, and fine jewelry, which are often considered more elastic due to their higher price levels. For example, as income rises, consumers might be more inclined to purchase new cars rather than used ones, or buy name brand groceries in place of generic brands. Therefore, the volatility in demand for certain goods is closely related to consumer preferences and the elasticity of these goods.