When Sam's annual income was only $15,000, he purchased 50 pounds of bananas a year. When his income rose to $18,000, he purchased 55 pounds a year. Therefore
A) for Sam, bananas are an inferior good.
B) his income elasticity of demand for bananas is negative.
C) his income elasticity and price elasticity of demand for bananas are both greater than one.
D) for Sam, bananas are a normal good.

Question

Quizplus · Accepted Answer

Bananas are a normal good for Sam because as his income increased from $15,000 to $18,000, his consumption of bananas also increased from 50 to 55 pounds, indicating a positive income elasticity of demand.

When Sam's Annual Income Was Only $15,000, He Purchased 50