All homothetic goods are normal goods.

Name: All homothetic goods are normal goods.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Homothetic goods are goods whose demand shares depend only on the ratio of their prices, not on their absolute prices. As income increases, the consumer increases their demand for these goods in proportion to the income increase, which is the definition of a normal good. Therefore, all homothetic goods are normal goods.

All Homothetic Goods Are Normal Goods