Question

suppose that the quantity demanded for a product rises by 9% as people's incomes rise by 3%. what type of good is this product?

Answer 1

The product with a 9% increase in demand as income rises by 3% is classified as a normal good, where demand increases with income.

Step-by-step explanation:

The product in question is a normal good, which is defined as a good where the quantity demanded increases as income increases. This behavior contrasts with an inferior good, where demand decreases as income rises. For the product described, a 9% increase in demand following a 3% rise in income clearly indicates that it is a normal good, as demand moves in the same direction as income.

Luxury goods tend to have an income elasticity of demand greater than 1, meaning that as people's incomes increase, the demand for the luxury good increases at a proportionally higher rate. In this case, the positive relationship between the rise in quantity demanded and the rise in income suggests that the product is a luxury or a normal good with a high income elasticity.