A normal good is a good whose demand increases as consumer income increases, and decreases as consumer income decreases. This means that as household income rises, people tend to buy more normal goods, and as household income falls, people tend to buy less. Therefore, the best choice is C, as it describes a good for which demand varies directly with household income.

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A Normal Good Is One

Question 8

Multiple Choice

A normal good is one

A) that everyone normally consumes.
B) that normal people consume.
C) for which demand varies directly with household income.
D) for which demand varies inversely with household income.
E) for which demand does not vary with household income.

Correct Answer: