Final answer:
The terms luxury brands and positional goods are not necessarily synonymous; luxury brands are high-end products, whereas positional goods signal social status. Normal goods, which have positive income elasticity, are divided into necessities (income elasticity < 1) and luxuries (income elasticity > 1), illustrating different consumption patterns with changes in income.
Step-by-step explanation:
The terms luxury brands and positional goods are not necessarily synonymous. Option 2: False. Luxury brands refer to products or services that are perceived as high-end or of high quality and often come with a high price tag. Positional goods, on the other hand, are items that signal a person's social status.
While many luxury brands can be positional goods, the two are not the same as not all luxury items may serve as status symbols, and not all positional goods have to be high-end or luxury.
Regarding normal goods, these are goods for which demand increases as consumers' income increases. Economists classify normal goods based on their income elasticity of demand.
Goods with an income elasticity of less than one are known as necessities, whereas those with an income elasticity greater than one are known as luxuries.
Necessities are essential items that people need and will buy regardless of income fluctuations, but they won't necessarily buy much more of them if their income increases.
Luxuries, however, are those items that people spend a larger proportion of their income on when they get a raise.