For each of the following good state whether this item is a normal good, a luxur

Question

For each of the following good state whether this item is a normal good, a luxury, a necessity,or a inferior good.

Mink coats.

A) Inferior. Individuals tend to purchase significantly fewer mink coats as their income increases because they spend more money on faux fur coats.

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

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

D)Normal and luxury. Everyone needs a few coats, but as income goes up, people buy nicer coats (elasticity is positive and greater than 1 in the short run).

Explanation / Answer

Normal good

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