Which type of goods would typically have a positive income elasticity of demand?
Understand the Problem
The question is asking about types of goods that have a positive income elasticity of demand, indicating that as income increases, the quantity demanded for these goods also increases. The potential answers categorize goods based on their relationship with consumer income.
Answer
Normal goods
Normal goods typically have a positive income elasticity of demand, meaning that demand increases as income increases.
Answer for screen readers
Normal goods typically have a positive income elasticity of demand, meaning that demand increases as income increases.
More Information
Normal goods are those for which demand increases as consumer income rises. This category includes many everyday items and services whose consumption grows with wealth levels.
Tips
A common mistake is confusing normal goods with inferior goods, which have a negative income elasticity of demand.
Sources
- Normal Good - Definition - investopedia.com
- Income Elasticity of Demand - LibreTexts - socialsci.libretexts.org
- Income Elasticity of Demand - Khan Academy - khanacademy.org
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