To determine whether a good is considered normal or inferior,one could examine the value of the
A)income elasticity of demand for that good.
B)price elasticity of demand for that good.
C)price elasticity of supply for that good.
D)cross-price elasticity of demand for that good.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of demand for a good to a change in consumer income. If the income elasticity of demand is positive, the good is considered a normal good, meaning that as consumer income increases, demand for the good also increases. If the income elasticity of demand is negative, the good is considered an inferior good, meaning that as consumer income increases, demand for the good decreases. Therefore, examining the income elasticity of demand for that good is the best way to determine whether it is normal or inferior.

To Determine Whether a Good Is Considered Normal or Inferior,one