Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.

Question

Quizplus · Accepted Answer

Normal goods are those for which demand increases as consumer income increases, leading to a positive income elasticity of demand. Inferior goods, on the other hand, see a decrease in demand as consumer income increases, resulting in a negative income elasticity of demand.

Normal Goods Have Positive Income Elasticities of Demand, While Inferior