Question

Quen the folowne income elasicitev of demant. woud you classfy met fialowns gogds as norme or inferiser gocods? A. Potatoes elasticity( =0.5 ) Question 9 Re Pinta beans elaticicy ( =01 ) fireitio?

Answer 1

Normal goods include goods with an income elasticity greater than 1, while inferior goods include goods with an income elasticity less than 1.

Step-by-step explanation:

Economists define normal goods as having a positive income elasticity. Normal goods can be divided into two categories based on their income elasticity:

1. Goods with an income elasticity less than 1 are called inferior goods. These are goods for which the demand decreases as income increases. Examples of inferior goods can include generic brands, cheap fast food, or public transportation.
2. Goods with an income elasticity greater than 1 are called normal goods. These are goods for which the demand increases as income increases. Examples of normal goods can include luxury goods like jewelry, vacations, or high-end electronic devices.