If the demand for a product increases as the result of an increase in income, it can be concluded that the
A) product is an inferior good.
B) demand for the product is inelastic.
C) price elasticity of demand for the product equals unity.
D) product is a normal good.

Question

Quizplus · Accepted Answer

The fact that the demand for the product increases as income increases indicates that the product is a normal good. In the case of an inferior good, the demand would decrease as income increases. The given information does not provide any indication of the price elasticity of demand or its inelasticity, so choices B and C can be eliminated.

If the Demand for a Product Increases as the Result