If a good is neither normal nor inferior, then:
A)there is no EV.
B)EV is larger than CV.
C)EV is smaller than CV.
D)EV and CV are the same.

Question

Quizplus · Accepted Answer

If a good is neither normal nor inferior, it means that a change in income will not affect the demand for the good (i.e. income elasticity of demand is zero). Therefore, both the EV and CV will be the same, as the price elasticity of demand is also zero (i.e. the change in quantity demanded is proportionate to the change in price). This means that the percentage change in price is equal to the percentage change in quantity demanded, and thus the EV and CV will be identical.

If a Good Is Neither Normal nor Inferior, Then