Suppose the demand curves for goods A,B,and C have the following functional forms,where Q denotes quantity demanded,P denotes price,and M denotes income: QA = 120 - 3.5PA - 6PB + 14M QB = 100 - 2PB + 3PC + 1.1M QC = 1500 - 0.5PC - 300M.
Based on these demand curves,which of the following goods are known to be normal goods?

Question

Quizplus · Accepted Answer

Normal goods have a positive relationship between income (M) and the quantity demanded, meaning as income increases, the demand for the good also increases. For goods A and B, the coefficients of M (income) are positive (14 for A and 1.1 for B), indicating they are normal goods. For good C, the coefficient of M is negative (-300), indicating it is an inferior good, not a normal good.

Suppose the Demand Curves for Goods A,B,and C Have the Following