Question

As the average income in China continues to​ increase, explain how the following will​ change: a. The demand for beef b. The demand for rice As the average income in China continues to​ increase, we would expect the demand for beef to​ _______ and the demand for rice to​ _______. A. decrease if beef is a normal​ good; increase if rice is an inferior good B. not​ change; not change because people need to eat regardless of their income C. increase if beef is a normal​ good; decrease if rice is an inferior good D. ​increase; increase because the demand for any good increases when income increases

Answer 1

Answer:

C. increase if beef is a normal​ good; decrease if rice is an inferior good.

Explanation:

As the average income in China continues to​ increase, we would expect the demand for beef to increase if beef is a normal​ good and the demand for rice to decrease if rice is an inferior good.

Normal goods are goods whose demand increase with the increase in income of consumer, however, demand decreases with the decrease in the income of consumer as we know Income is a key factor, which affect the demand of goods and services. Examples of Normal goods are Beef, Pizza, etc.

Inferior goods are goods whoes demand decreases with the increase in income of consumer, however, demand increases with the decrease in the income of consumer. Examples of Inferior goods are Cereal, Rice, non branded noodles etc.