Question

Suppose a 4% increase in the economy leads to an 8% increase in soft drink consumption. Then the income elasticity of demand is:

a. negative, so soft drink are an inferior good
b. negative, so soft drinks are a normal good
c. positive, so soft drink are a normal good
d. positive, so soft drinks are an inferior good

Answer 1

Answer : c
E > 0, thus it is a normal good