An economist predicts that in a bicycle company, other things equal, a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Question

Quizplus · Accepted Answer

The prediction is based on the assumption that bicycles are normal goods, which means that as consumer incomes rise, they will have more money to spend on bicycles and other goods. If bicycles were inferior goods, then the prediction would be the opposite, as consumers would switch to more expensive alternatives as their incomes rise. The other answer choices are not relevant to the prediction.

An Economist Predicts That in a Bicycle Company, Other Things