If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:
A)Both good A and good B are normal.
B)Both good A and good B are inferior.
C)Good A is normal and good B is inferior.
D)Good A is inferior and good B is normal.

Question

If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:
A)​Both good A and good B are normal.
B)​Both good A and good B are inferior.
C)​Good A is normal and good B is inferior.
D)​Good A is inferior and good B is normal.

Quizplus · Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good responds to a change in consumers' income. A positive income elasticity indicates that as income increases, demand for the good increases, classifying it as a normal good. Both goods A and B have positive income elasticities (3.9 and 0.2, respectively), making them both normal goods.

If the Income Elasticity of Demand for Good a Was