Suppose European incomes increase annually by 4 percent per year,and as a result,U.S.farm exports to Europe rise by 2 percent annually.The U.S.farm exports are
A)Inferior goods.
B)Normal goods.
C)Price-elastic.

Question

Quizplus · Accepted Answer

U.S. farm exports to Europe rising as a result of increasing European incomes suggests that U.S. farm exports are a normal good. As income rises, demand for U.S. farm exports increases, but the fact that the increase in demand is only 2 percent annually suggests that U.S. farm exports are not price-elastic.

Suppose European Incomes Increase Annually by 4 Percent Per Year,and