Suppose good X has a positive income elasticity of demand. This implies that good X could be i) a normal good.
Ii) a necessity.
Iii) an inferior good.
Iv) a luxury.
A) i) only
B) i) and ii) only
C) i), ii), and iv) only
D) iii) only

Question

Quizplus · Accepted Answer

A positive income elasticity of demand means that as consumers' incomes increase, the demand for good X also increases. This is characteristic of normal goods, necessities, and luxury goods. An inferior good has a negative income elasticity of demand, meaning that as consumers' incomes increase, demand for the good decreases. Therefore, the correct answer is C) i), ii), and iv) only.

Suppose Good X Has a Positive Income Elasticity of Demand