If you expect the economy is going to experience a boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is
A)one that sells an inferior good.
B)one that sells a necessity good.
C)one that sells a luxury good.
D)one that sells a price-inelastic good.

Question

Quizplus · Accepted Answer

A luxury good is a type of product that people purchase more frequently when their income rises. Therefore, if the economy experiences a boom and average income increases, the demand for luxury goods will increase, leading to an increase in sales for firms that sell luxury goods.

If You Expect the Economy Is Going to Experience a Boom