If a decrease in income leads to a decrease in the demand for ice cream,then ice cream is
A)a normal good.
B)a neutral good.
C)a complement.
D)a necessity.

Question

Quizplus · Accepted Answer

When people's income decreases, they tend to cut back on their spending. If a decrease in income leads to a decrease in the demand for ice cream, then we can conclude that ice cream is a normal good. This means that as income increases, people are willing to spend more on ice cream because they have more disposable income to use on non-essential items like ice cream. Therefore, if income decreases, people have less money to spend on non-essential items like ice cream, which causes demand for ice cream to decrease.

If a Decrease in Income Leads to a Decrease in the Demand