Question

An economist for a bicycle company predicts that a rise in consumer incomes will increase the demand for bicycles. this prediction assumes that?

Answer 1

When an economist makes a prediction that a rise in consumer incomes will increase the demand for bicycles sold by a bicycle company, it is made on assumption that bicycles are normal goods. Therefore, the option A holds true.

What is the significance of normal goods?

The normal goods or services being sold in the market of an economy can be referred to or considered as goods that have a direct relation with the demand for such goods, which are affected by consumer income.

As per the behavior of normal goods, it can be inferred that their demands increases with a given increase in the disposable income of the consumer, such as the one in the condition given above.

Therefore, the option A holds true and states regarding the significance of normal goods.

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An economist for a bicycle company predicts that a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that bicycles are _____.

A. Normal goods

B. Luxury Goods

C. Inferior Goods

D. None of the Above