Question

2.2 Discuss how time affects the price elasticity of demand for normal goods produced by a business. Include in your answer an explanation of the meaning of normal goods.

Answer 1

Answer : Normal goods are goods in which as there income increases the demand also increases but these are goods which demand does not change with change in the price of the goods in systematic and logical manner,.Normal goods price elasticity of demand are less elastic inthe short period of time as the habit formation or taste for the product has been developed where as normal good price elasticity of demand are elastic in the long period of time because more substitutes are available with them and larger income generation.