Question:
If the demand for milk increases whenever a person’s income increases, then milk is an example of
(1) an inferior good.
(2) a free good.
(3) a normal good.
(4) a merit good.
(5) a Giffen good.
Correct Answer:
(3)
Answer Explanation:
A normal good is defined by a positive income elasticity of demand. When a consumer’s income rises, their demand for a normal good will also increase, shifting the demand curve to the right.
Topic: Consumer Theory Year: 2018
Leave a Reply