For each of the following goods, state whether it is a normal good, a luxury, a necessity, or an inferior good

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For each of the following goods, state whether it is a normal good, a luxury, a necessity, or an inferior good. Explain your answers.

a. Vodka.

i. Normal and luxury. Individuals tend to drink more hard liquor as their income rises and income elasticity is likely greater than 1.

ii. Inferior. Individuals tend to drink significantly less hard liquor as their income rises because they will substitute beer for liquor. iii. Normal and luxury. Individuals tend to drink more hard liquor as their income rises and income elasticity is likely less than 1. iv. Normal and necessity. Individuals tend to drink more hard liquor as their income rises and income elasticity is likely greater than 1.

b. Table salt.

i. Inferior. Individuals tend to consume significantly less salt as their income rises because they can afford more expensive spices to flavor their food.

ii. Normal and luxury. It is a small portion of people's income, so its consumption increases significantly with income (income elasticity is positive and greater than 1).

iii. Normal and necessity. It is a small portion of people's income, and its consumption doesn't increase much with income (income elasticity is positive but close to zero).

iv. Normal and luxury. It is a small portion of people's income, and its consumption doesn't increase much with income (income elasticity is positive but close to zero).

c. Furniture.

i. Normal and luxury. Everyone needs some furniture. As income goes up, people do not usually choose to get rid of the furniture they already have (income elasticity is positive and less than 1 in the short run).

ii. Inferior. Individuals tend to purchase significantly less furniture as their income increases because they spend more money on artwork and decor.

iii. Normal and luxury. Everyone needs some furniture, but as income goes up, people buy much more and much nicer furniture (income elasticity is positive and greater than 1 in the short run).

iv. Normal and necessity. Most people have about the same need for furniture. As income increases, people have little reason to replace the furniture they already have (income elasticity is positive and greater than 1 in the short run).

d. Perfume.

i. Normal and necessity. As income increases, people purchase less perfume than before. When people have higher incomes, they do not have to work at jobs that make them smell bad, so they don't need as much perfume.

ii. Normal and necessity. As income increases, people purchase slightly more perfume than before. However, since everyone uses perfume, the income elasticity is positive and greater than 1.

iii. Normal and luxury. As income increases, people purchase much more perfume than before. The income elasticity of perfume is positive and likely greater than 1. -

iv. Normal and luxury. As income increases, people purchase much more perfume than before. The income elasticity of perfume is positive and less than 1.

e. Beer.

i.-Normal and necessity. Beer is the cheapest type of alcohol and tends to be consumed by individuals with lower income. As income increases people purchase more beer. Income elasticity for beer is therefore positive and greater than 1.

ii. -Normal and necessity. Beer is the cheapest type of alcohol and tends to be consumed by individuals with lower income. As income increases, people purchase more beer. Thus income elasticity for beer is positive and equal to 1.

iii. -Normal and necessity. Beer is the cheapest type of alcohol and tends to be consumed by individuals with lower income. As income increases, people substitute wine and liquor for beer. Thus income elasticity for beer is positive and less than 1.

iv. -Inferior. Beer is the cheapest type of alcohol and tends to be consumed by individuals with lower income. As income increases, people substitute wine and liquor for beer. Thus income elasticity for beer is positive but less than 1.

f. Sugar

i. -Inferior. Increases in income lead to less use of sugar. However, high-income people do not use much less sugar than low-income people, so income elasticity is positive but greater than 1.

ii. -Normal and necessity. Increases in income lead to slightly more use of sugar. However, high-income people do not use much more sugar than low-income people, so income elasticity is positive and greater than 1.

iii. -Inferior. Increases in income lead to slightly more use of sugar. However, high-income people do not use much more sugar than low-income people, so income elasticity is positive but less than 1.

iv. -Normal and necessity. Increases in income lead to slightly more use of sugar. However, high-income people do not use much more sugar than low-income people, so income elasticity is positive but less than 1.