If one is interested in knowing whether or not a product is a normal good, one would be interested in the value of the:
A)elasticity of supply.
B)price elasticity of demand.
C)income elasticity of demand.
D)cross-price elasticity of demand.

Question

If one is interested in knowing whether or not a product is a normal good, one would be interested in the value of the:
A)​elasticity of supply.
B)​price elasticity of demand.
C)​income elasticity of demand.
D)​cross-price elasticity of demand.

Quizplus · Accepted Answer

The concept of normal goods refers to products that have a positive relationship between their demand and consumer income. The income elasticity of demand measures this relationship by indicating the percentage change in quantity demanded resulting from a one percent change in consumer income. If the income elasticity of demand is positive, then the product is a normal good. Alternatively, if it is negative, then the product is an inferior good. Therefore, the value of income elasticity of demand is relevant for determining if a good is normal or inferior.

If One Is Interested in Knowing Whether or Not a Product