The number of music CDs purchased increased by 50 per cent when consumer income increased by 10 per cent. Assuming other factors are held constant, music CDs would be classified as:
A) inferior goods.
B) normal goods.
C) Giffen goods.
D) social goods.

Question

Quizplus · Accepted Answer

Normal goods are those for which the quantity demanded increases as consumer income increases. In this case, the increase in consumer income led to an increase in the quantity demanded of music CDs, indicating they are a normal good. Inferior goods are those for which the quantity demanded decreases as consumer income increases, and Giffen goods are a rare type of inferior good in which the quantity demanded actually increases as the price of the good increases. Social goods are those provided by the government for the benefit of society as a whole, such as public parks or libraries, and do not fit this situation.

The Number of Music CDs Purchased Increased by 50 Per