For a normal good,the income elasticity of demand is:
A)positive or negative depending on the share of income accounted for by the good.
B)always equal to 1.
C)positive if income increases and negative when income declines.
D)always positive.

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the responsiveness of the quantity demanded to a change in income. For a normal good, when income increases, the demand for the good also increases, and when income decreases, the demand for the good decreases as well. Therefore, the income elasticity of demand for a normal good is always positive.

For a Normal Good,the Income Elasticity of Demand Is