Over the decades, as economic growth has expanded the level of personal disposab
ID: 1107306 • Letter: O
Question
Over the decades, as economic growth has expanded the level of personal disposable income in the United States, the consumption of various products has changed as a result of the income elasticity of demand. Grocery store sales have declined while restaurant sales have increased. This would lead you to conclude that
Grocery stores and restaurants are normal goods.
Grocery stores are an inferior good and restaurants are a normal good.
Grocery stores are normal goods and restaurants are inferior goods.
Grocery stores and restaurants are inferior goods.
It is not possible to tell from the information question.
a.Grocery stores and restaurants are normal goods.
b.Grocery stores are an inferior good and restaurants are a normal good.
c.Grocery stores are normal goods and restaurants are inferior goods.
d.Grocery stores and restaurants are inferior goods.
e.It is not possible to tell from the information question.
Explanation / Answer
Answer.) b.) Grocery stores are an inferior good and restaurants are a normal good.
Positive income elasticity greater is associated with normal goods while a negative income elasticity of demand is associated with inferior goods.
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