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What is a normal good concerning changes in income?
  • a)
    Demand increases as income decreases.
  • b)
    Demand increases as income increases.
  • c)
    Demand remains constant regardless of income changes.
  • d)
    Demand decreases as income decreases.
Correct answer is option 'B'. Can you explain this answer?
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What is a normal good concerning changes in income?a)Demand increases ...
Normal Good and Changes in Income

Understanding the concept of normal goods and their relationship with changes in income is crucial in economics. A normal good is a type of good for which demand increases as income increases.

Explanation

- Income and Demand: When individuals' income levels rise, they tend to have more purchasing power. As a result, they are more likely to buy more of normal goods. This is because they have the financial capability to afford these goods at higher quantities or better quality.

- Income Decreases: On the other hand, if income decreases, individuals may not have the same level of disposable income. This could lead to a decrease in the demand for normal goods as they prioritize essential items over discretionary purchases.

- Example: For example, if a person's income increases, they may choose to upgrade from a basic smartphone to a higher-end model. However, if their income decreases, they may opt to stick with their current phone or choose a lower-priced alternative.

- Graphical Representation: In a demand curve for a normal good, as income increases, the demand curve shifts to the right, indicating an increase in demand. Conversely, as income decreases, the demand curve shifts to the left, indicating a decrease in demand.

In conclusion, normal goods exhibit a positive income elasticity of demand, meaning that as income rises, demand for these goods also increases. This relationship is essential for understanding consumer behavior and market trends.
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What is a normal good concerning changes in income?a)Demand increases ...
A normal good is a good for which demand increases as incomes rise and decreases as incomes fall.
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What is a normal good concerning changes in income?a)Demand increases as income decreases.b)Demand increases as income increases.c)Demand remains constant regardless of income changes.d)Demand decreases as income decreases.Correct answer is option 'B'. Can you explain this answer?
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