What is the effect of a rise in income on the quantity demanded of a product?
A)It will rise if it is an inferior good.
B)It will rise if it is a normal good.
C)It will fall if it has many substitute goods.
D)It will fall if price elasticity of demand is zero.

Question

Quizplus · Accepted Answer

A rise in income leads to an increase in the quantity demanded of a normal good, as consumers have more disposable income to spend on goods and services. However, it should be noted that if the income rise is significant enough, it may cause a shift in consumer preferences towards more luxurious products, which may reduce the demand for some normal goods.

What Is the Effect of a Rise in Income on the Quantity