What is a normal good? A)It is a good whose income elasticity of demand is 1.

Question

What is a normal good?
A)It is a good whose income elasticity of demand is < 1.
B)It is a good whose quantity demanded will rise as income rises.
C)It is a good which has many substitutes.
D)It is a good whose income elasticity is > 1.

Quizplus · Accepted Answer

A normal good is a good whose demand increases as income increases. This means that as consumers' income rises, they are willing and able to buy more of the normal good, leading to an increase in its quantity demanded. Thus, a normal good has a positive income elasticity of demand, which is greater than zero but less than one.

What Is a Normal Good