Assuming the same sized substitution effect, normal goods have steeper cross-price demand curves than inferior goods.

Question

Quizplus · Accepted Answer

This statement is true because normal goods are typically of higher quality and have more substitutes available in the market, so a small change in relative price will lead to a larger change in quantity demanded. On the other hand, inferior goods have fewer substitutes and are often considered necessities, so a change in price may have less of an effect on quantity demanded. Therefore, the cross-price elasticity of demand for normal goods is generally higher than for inferior goods, making their demand curves steeper.

Assuming the Same Sized Substitution Effect, Normal Goods Have Steeper