If an individual consumes more of good X when his/her income doubles, we can infer that
A)the individual is highly sensitive to changes in the price of good X.
B)good X is a normal good.
C)good X is an inferior good.
D)the demand for good X is perfectly inelastic.

Question

Quizplus · Accepted Answer

If the individual is consuming more of good X when his/her income doubles, it means that good X is a normal good, i.e. the demand for it increases as income increases. Option A cannot be inferred as we do not have any information about changes in the price of good X. Option C can be ruled out as with an increase in income, an individual will generally switch to better quality goods, and not to inferior goods. Option D can be ruled out as the demand for good X is responsive to changes in income.

If an Individual Consumes More of Good X When His/her