Question

An individual consumes two goods and her preferences satisfy non-satiation. It follows that at least one of the two goods must be a normal good. Is this true or false? Explain your answer.

Answer 1

True

The property of non satiation means consumer prefers more to less.

So when income rises, the consumer prefers more of a good to less.

Let's suppose both goods are inferior goods, So when income rises, consumer consumes less of both goods, but this camnot happen since preferences are non satiable. So the consumer must increase consumption of atleast one good else the utility will fall. So one of the good has to be a normal good in order for the preferences to satisfy the non satiable property.