Question

The definition of a normal good suggests that the rev: 05_14_2018 Multiple Choice income elasticity of demand for the good is negative. price elasticity of demand for the good is negative. cross-price elasticity of demand for the good is positive. income elasticity of demand for the good is greater than 0.

Answer 1

Answer:

income elasticity of demand for the good is greater than 0.

Explanation:

A product (goods) can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.

The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.

Generally, consumers would like to be buy a product as its price falls or become inexpensive.

An income elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in the income of a consumer (consumer income), all things being equal.

Generally, when the income elasticity of demand for a product is greater than zero (0); this is a normal good or product.

Hence, the definition of a normal good suggests that the income elasticity of demand for the good is greater than 0.

This ultimately implies that, the demand for the good or product rises (increases) as the income of the consumer rises.