Question

Economists call a good for which increases in income result in increased demand a(n)

a	normal good.

b	income-sensitive good.

c	inferior good.

d	positively relationship good.

e	None of the above is correct.

Which of the following is not likely to be a normal good?

a

Housing

b

Education

c	Vacation away from home

d	Business attire

e	Low-quality cuts of meat

Inferior goods are those goods

a	tend to have lower demand among the lower classes.

b	for which increases in demand result in lower demand.

c	which have poor quality.

d	are placed on supermarket shelves below the fast-moving products.

e	demand is positively related to income.

All of the following tend to be examples of inferior goods except

a	bus rides.

b	pawn shop loans.

c	appliances.

d	no-frills or store brand home products.

e	day-old bread on the supermarket clearance rack.

Answer 1

Answer : 1) Option a is correct.

According to the economists, for a normal good demand is higher if income rise.

2) Option e is correct.

Except option e all options are examples of normal good. Because demand increase for those if income rises. But demand for low quality cuts of meat decrease if income increase. Therefore, low quality meat is not normal good.

3) Option b is correct.

Because in case of inferior good demand increase if income decrease but if income increase then demand decrease.

4) Option d is correct.

As home products are not stored , if income increase then demand for those products increase and if income decrease then demand decrease. But in case of inferior good demand decrease if income increase. Therefore, option d is not the example of inferior good.