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For most products, most of the time, what sign does the income elasticity of demand have, and what does the source call these goods?
ANegative, and they are called inferior goods
BPositive, and they are called normal goods
CNegative, and they are called normal goods
DPositive, and they are called inferior goods
Answer & Solution
Correct answer: B. Positive, and they are called normal goods
1. Most goods see quantity demanded rise when income rises.
2. That means income elasticity of demand is positive for most goods most of the time.
3. The source calls goods with this common pattern normal goods.
4. Inferior goods are the less common case where the income elasticity is negative instead.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.4 | Elasticity in Areas Other Than Price_
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