If people buy less chewing gum at every price when their incomes fall, then
A) chewing gum is a normal good.
B) the demand for chewing gum is positively sloped.
C) demand for chewing gum has increased.
D) the price of chewing gum has increased.
E) there has been a decrease in population that changed demand.

Question

Quizplus · Accepted Answer

When people buy less of a good or service as their incomes fall, it is an indication that the good or service is a normal good. Chewing gum is a normal good because as people's incomes fall, they tend to cut back on non-essential items, such as gum. The fact that demand for chewing gum decreases as incomes fall also implies that the demand for chewing gum is negatively sloped, not positively sloped. There is no evidence to suggest that demand for chewing gum has increased or that the price of chewing gum has increased. The scenario also does not mention anything about a decrease in population, so that cannot be a factor in the change in demand for chewing gum.

If People Buy Less Chewing Gum at Every Price When