Question

If the income elasticity of demand is ________ zero, then the good is ________.

a. greater than; normal

b. less than; normal

c. equal to; unit elastic  

d. equal to; perfectly elastic

As the costs of higher education rises, which of the following certainly occurs?

a. More students will attend classes.

b. Opportunity costs of education are higher.

c. More choices exist.

d. Class size is lower.

Answer 1

Since normal good is defined as those goods which have positive income elasticity.

Hence if the income elasticity of demand is greater than zero, then good is normal good.

Hence option a is the correct answer.

B.

Since opportunity cost is forgone opportunity due to choosing it's alternative options.

Hence as the cost of higher education rises, so the opportunity cost of higher education also rises.

Hence option b is the correct answer.