The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-Last year, Alice bought 40 CDs when her income was $20,000. This year, her income increased to $25,000, and she purchased 48 CDs. We can conclude that:
A)Alice's price elasticity of demand for CDs is equal to 1.
B)Alice's demand for CDs is price-inelastic.
C)Alice's demand for CDs is price-elastic.
D)the income elasticity of demand for CDs is negative.
E)CDs are a normal good.

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-Last year, Alice bought 40 CDs when her income was $20,000. This year, her income increased to $25,000, and she purchased 48 CDs. We can conclude that:
A)Alice's price elasticity of demand for CDs is equal to 1. 
B)Alice's demand for CDs is price-inelastic. 
C)Alice's demand for CDs is price-elastic. 
D)the income elasticity of demand for CDs is negative. 
E)CDs are a normal good.

Quizplus · Accepted Answer

The increase in Alice's purchase of CDs with an increase in her income indicates that CDs are a normal good for her, as she buys more of them when her income rises. This is consistent with the definition of a normal good, where demand increases as consumer income increases.

The Figure Given Below Shows the Demand Curves for Five