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Question 11 1 pts Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing. If a
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Answer #1

Normal goods.

Income elasticity of goods reveals a few very important features of demand for the goods in question. If income elasticity is zero, it signifies that the demand for the good is quite unresponsive to changes in income. When income elasticity is greater than zero or positive, then an increase in income leads to an increase in demand for the good. This happens in the case of most of the goods and such goods are called normal goods.normal goods are any items for which demand increases when income increases.

Inferior goods.

goods having negative income elasticity are known as inferior goods and their demand falls as income increases. The reason is that when income increases, consumers choose to consume superior substitutes.

in the present problem Betty spend her monthly allowance on buying computer games,watching movies and para sailing.due to increase her monthly incomes her expenditure on parasailing activities are also increases .the parasailing activities is a normal goods. beacuse its demand is increase when her income or allowance increases.

Last option is correct

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