If I told you that the income elasticity for hybrid cars was positive, you would know that:
A)there are many substitutes for hybrid cars.
B)there are few substitutes for hybrid cars.
C)hybrid cars are a normal good.
D)hybrid cars are an inferior good.

Question

Quizplus · Accepted Answer

A positive income elasticity means that as income increases, the demand for hybrid cars also increases. This indicates that hybrid cars are a normal good, as opposed to an inferior good where demand decreases as income increases. The availability of substitutes does not affect income elasticity.

If I Told You That the Income Elasticity for Hybrid