Suppose good X has a positive income elasticity of demand. This implies that good X could be
(i)a normal good.
(ii)a necessity.
(iii)an inferior good.
(iv)a luxury.
A)(i) only
B)(i) and (ii) only
C)(i), (ii), and (iv) only
D)(iii) only

Question

Quizplus · Accepted Answer

A positive income elasticity of demand indicates that as income increases, the demand for good X increases. This is characteristic of normal goods, which include necessities and luxuries, but not inferior goods.

Suppose Good X Has a Positive Income Elasticity of Demand