Question

If demand for a commodity increases with increase in consumer income, the commodity is known as:

• A. Inferior Good
• B. Giffen Good
• C. Normal Good
• D. Substitute Good

Hint:

Logic Tip: Normal goods have positive income elasticity of demand.

Answer 1

The Correct Option is C

Step 1:
Consumer demand changes when income changes.

Step 2:
For normal goods: \[ \text{Income} \uparrow \Rightarrow \text{Demand} \uparrow \]

Step 3:

• Inferior good $\rightarrow$ Demand decreases with income rise
• Giffen good $\rightarrow$ Special inferior good
• Substitute goods $\rightarrow$ Related goods

Step 4:
Hence, the commodity is called: \[ \boxed{\text{Normal Good}} \] Therefore, the correct answer is: \[ \boxed{\text{(3) Normal Good}} \]