Linesha, a college student working part-time, receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information,
A) DVDs and Blu-ray discs are substitutes.
B) Blu-ray discs are normal goods and DVDs are inferior goods.
C) DVDs and Blu-ray discs are normal goods.
D) the cross-price elasticity between DVDs and Blu-ray discs is negative.

Question

Quizplus · Accepted Answer

Linesha's behavior suggests that Blu-ray discs are normal goods because she buys more of them as her income increases. DVDs are likely inferior goods because she buys fewer of them as her income increases.

Linesha, a College Student Working Part-Time, Receives a Wage Increase