question archive If income increases by 10 percent and the quantity demanded of a good then increases by 5 percent, the good is inferior and income-elastic
If income increases by 10 percent and the quantity demanded of a good then increases by 5 percent, the good is inferior and income-elastic
Subject:EconomicsPrice:2.87 Bought7
If income increases by 10 percent and the quantity demanded of a good then increases by 5 percent, the good is
inferior and income-elastic.
normal and income-elastic,
inferior and income inelastic
normal and income inelastic
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Answer:
Income is positively related with the demand of normal good whereas it is negatively related with the demand of inferior good. Hence, if there is an increase in the income level of the consumer then as a result the demand for normal good also increases and if there is a fall in the income of the consumer then as a result the demand for inferior good increases.
Therefore, in this case, the good is normal good.
As we can see that the percentage increase in the quantity demanded is less than the percentage increase in the income, so the demand is said to be income-inelastic. It means that the quantity demanded for a good is not very responsive to changes in the consumer's income.
Hence, the correct option is ''normal and income-inelastic''.
