Good A is a normal good if
A)a rise in the price of a complement causes the demand for A to decrease.
B)income and the demand for A are negatively related.
C)a rise in the price of a substitute causes the demand for A to increase.
D)the demand for A increases when income rises.
E)good A satisfies the law of demand.

Question

Quizplus · Accepted Answer

A normal good is one where demand increases as income rises. A rise in the price of a complement (Option A) would not necessarily affect the demand for A. Similarly, a rise in the price of a substitute (Option C) may cause some consumers to switch to A, but it does not guarantee an increase in overall demand for A. Option B (negative income-demand relationship) is a characteristic of inferior goods. Option E (satisfaction of the law of demand) is a necessary but not sufficient condition for a good to be normal.

Good a Is a Normal Good If