A manager can determine if her product is viewed as a normal good or an inferior good by considering

Question

Quizplus · Accepted Answer

The best way for a manager to determine whether her product is viewed as a normal good or an inferior good is by analyzing its income elasticity of demand. If the product has a positive income elasticity of demand, it is a normal good – meaning that as consumer income increases, so too does the demand for the product. On the other hand, if the product has a negative income elasticity of demand, it is an inferior good – meaning that as consumer income increases, demand for the product decreases. Therefore, choice (C) income elasticity is the best choice since it specifically deals with how changes in income affect demand for the product.

A Manager Can Determine If Her Product Is Viewed as a Normal