What is the relationship between goods and the income effect?
A)An inferior good has a positive income effect.
B)A normal good has a positive income effect.
C)An inferior good has no income effect.
D)A normal good has no income effect.
E)A normal good has a negative income effect.

Question

Quizplus · Accepted Answer

The income effect refers to the change in the quantity of a good demanded due to changes in the consumer's income. For a normal good, an increase in income leads to an increase in the quantity demanded (positive income effect), while a decrease in income leads to a decrease in the quantity demanded (negative income effect). Therefore, option B is correct.

What Is the Relationship Between Goods and the Income Effect