If the income elasticity of demand for a good is positive, the good is said to be a(n):
A) inferior good.
B) substitute good.
C) normal good.
D) positive good.

Question

Quizplus · Accepted Answer

A positive income elasticity of demand indicates that as income increases, the quantity demanded of the good also increases, which is characteristic of a normal good. An inferior good has a negative income elasticity of demand, meaning that as income increases, the quantity demanded of the good decreases. A substitute good would be unrelated to income elasticity of demand. Positive or negative goods are not commonly used economic terms.

If the Income Elasticity of Demand for a Good Is