To assess whether or not a good is normal or inferior, economists are interested in the cross price elasticity of demand.

Question

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Economists use income elasticity of demand, not cross price elasticity of demand, to assess whether a good is normal or inferior. Normal goods have a positive income elasticity, while inferior goods have a negative income elasticity. Cross price elasticity of demand measures how the quantity demanded of one good responds to a change in the price of another good.

To Assess Whether or Not a Good Is Normal or Inferior