Answer to Question #294453 in Microeconomics for Chorn Bunthean

Question

Income is rising, and income elasticity of demand is positive.

Answer 1

Income is rising, and the income elasticity of demand is positive.

Positive income elasticity of demand

It describes a situation in which demand for a commodity grows in response to rising consumer income and falls in response to falling consumer income. Normal goods are commodities having a positive income elasticity of demand.

Normal goods have a positive income elasticity of demand, which means that when incomes grow, more items at each price level are demanded.

Normal goods with a demand elasticity of zero to one are commonly referred to as necessary goods, which are products and services that people will purchase regardless of their income levels. Tobacco, haircuts, water, and electricity are examples of essential commodities and services.