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Answer:</h2>
Normal good
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Step-by-step explanation:</h2>
There are 3 basic types of commodities or goods;
i. The normal good
ii. The luxury good
iii. The inferior good
Relative to income and demand, when an increase in income causes an increase in the demand for a good, then the good is a <em>normal good</em>. For a normal good, the measure of the responsiveness of demand to a change in income (known as income elasticity of demand) is always greater than 0. In other words, it is positive.
If instead, an increase in income causes a decrease in the demand for a good, then the good is an <em>inferior good</em>. The income elasticity of demand for an inferior good is less than 0. In other words, it is negative.
When the increase in income causes a larger percentage in the demand for a good, then the good is a <em>luxury</em> good. Luxury goods are a special type of normal goods. The income elasticity of demand for a luxury good is greater than 1 since their is a larger percentage increase in the demand.
<em>Income elasticity of demand is calculated by finding the ratio of the percentage increase in the demand to the percentage increase in income.</em>
In the illustration given, the consumer's income increases by 50% causing the demand for good Y to increase by 25%. This is an example of a normal group. i.e increase in income causes an increase in the demand for good Y.
The income elasticity of demand for good Y is given as the ratio of the percentage increase in demand (25%) to the percentage increase in income (50%). Therefore, the income elasticity of demand for good Y is;
25% / 50% = 0.5
Since the income of elasticity of demand for good Y is 0.5 which is greater than 0, good Y is a <em>normal good</em>.