Question

If a good is normal, then:

a. income and demand for the good are negatively related
b. good is considered to be preferable to other goods
c. income and demand for the good are positively related
d. good is considered to be of lower quality than other goods

Answer 1

If a good is normal, income and demand for the good are positively related, which means that as income increases, so does the demand for the normal good.

Step-by-step explanation:

If a good is normal, then the correct answer is: c. income and demand for the good are positively related. This relationship means that as a person's income increases, their demand for the normal good also increases. This is because a normal good has a positive income elasticity of demand.

For instance, products like luxury cars, vacations, or fine jewelry see greater demand when consumers have higher incomes. Conversely, an inferior good would see a decrease in demand as income rises since people would then be able to afford more expensive choices.