Asked by Brycen Cluster on Jun 20, 2024
Verified
Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.
Income Elasticities
Refers to the sensitivity of the demand for a good to changes in the income of the consumers who buy this good.
Normal Goods
Products that see an increase in demand when consumer income grows, and experience a drop in demand as consumer income declines.
- Distinguish between typical and lesser-quality goods through the lens of income elasticity of demand.
Verified Answer
BL
Belen LopezJun 20, 2024
Final Answer :
True
Explanation :
Normal goods are those for which demand increases as consumer income increases, leading to a positive income elasticity of demand. Inferior goods, on the other hand, see a decrease in demand as consumer income increases, resulting in a negative income elasticity of demand.
Learning Objectives
- Distinguish between typical and lesser-quality goods through the lens of income elasticity of demand.
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