Question

When income increases, the demand for type of goods will increase:

• A. Inferior
• B. Giffen
• C. Normal
• D. Homogeneous Necessities

Hint:

Normal goods are those that see an increase in demand when consumer incomes rise, which applies to most goods in the economy.

Answer 1

The Correct Option is C

Step 1: Understanding the types of goods.

- Inferior goods: These are goods for which demand decreases as income increases. They are typically lower-quality goods.
- Giffen goods: These are a type of inferior goods that paradoxically see an increase in demand as prices rise due to income and substitution effects.
- Normal goods: These are goods for which demand increases as income increases, which is the case for most products.
- Homogeneous necessities: These are essential goods, but their demand doesn't necessarily increase significantly with higher income.

Step 2: Conclusion.
Therefore, the correct answer is (C) Normal, as normal goods experience an increase in demand when income rises.
Final Answer: Normal.