An economist for a bicycle company predicts that,other things equal,a rise in consumer incomes will increase the demand for bicycles.This prediction is based on the assumption that:

Question

Quizplus · Accepted Answer

The economist's prediction is based on the assumption that bicycles are normal goods, meaning that as consumer incomes rise, they will have more disposable income to spend on goods like bicycles. If bicycles were inferior goods (meaning that as income rises, demand for bicycles decreases), the economist's prediction would not hold. The other answer choices are not relevant to the economist's prediction.

An Economist for a Bicycle Company Predicts That,other Things Equal,a