Question

Which of the following statements is about a normal good​, which is about an inferior good​, which is about​ both, and which is about​ neither?
I With incomes falling in the​ recession, people are buying more chicken.
II People are buying more beef now that incomes have increased.
III People are buying more chicken because the price of chicken has fallen.
IV With higher incomes people are switching from chicken to beef.

Answer 1

Answer:

With incomes falling in the​ recession, people are buying more chicken. - this statement is about inferior goods

II People are buying more beef now that incomes have increased. - this statement is about normal good

III People are buying more chicken because the price of chicken has fallen. This statment is about neither

IV With higher incomes people are switching from chicken to beef. - this statement is about both normal and inferior goods

Explanation:

A normal good is a good whose demand rises when income increases and falls when income falls. In this question, beef is a normal good.

An inferior good is a good whose demand rises when income fall and falls when income rises. Chicken is an inferior good in this example.