1. The difference between an "inferior" good and a "normal" good in Economics is:
1. The difference between an "inferior" good and a "normal" good in Economics is:
a. The demand for a normal good decreases as the price increases, which is not the case for an inferior good
b. The demand for a normal good increases as the price increases, which is not the case for an inferior good
c. The demand for a normal good decreases as household income increases, which is not the case for an inferior good
d. The demand for a normal good increases as household income increases, which is not the case for an inferior good
Homework Answers
Question 1
In case of normal good, there is positive income effect. In other words, when the income of household increases, demand for normal good increases and vice-versa.
On the other hand, in case of inferior good, there is negative income effect. In other words, when the income of household increases, demand for inferior good decreases and vice-versa.
Thus,
The demand for a normal good increases as household income increases, which is not the case for an inferior good.
Hence, the correct answer is the option (d).
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1. The difference between an "inferior" good and a "normal" good in Economics is:
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