Question

Jessica experienced an increase in her income by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica: a milk is a normal good, but bread is an inferior good. b both milk and bread are normal goods. c milk is an inferior good, but bread is a normal good. d milk is a normal good, but bread is a Giffen good. e both milk and bread are inferior goods.

Answer 1

Answer:

b both milk and bread are normal goods.

Explanation:

Jessica's demand for bread and milk increased as her income increased. This implies that both milk and bread are normal goods.

A normal good is a good for which demand increases as income rises and demand decreases as income falls.