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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
It is perhaps unfortunate that economists often take perfectly good English words and give them different definitions. When an economist speaks of a normal good, he is saying nothing other than that the demand for that particular good rises when income increases and falls when income decreases. Hence, if we find that when income rises, people buy more meals at restaurants, then dining out is defined to be a normal good.
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4.3. Income Elasticity of Demand: Normal and Inferior Goods
n be negative, positive, or zero. Positive income elasticity simply means that as income rises, quantity demanded also rises, as is characteristic of most consumption goods. We define a good with positive income elasticity as a normal good . <span>It is perhaps unfortunate that economists often take perfectly good English words and give them different definitions. When an economist speaks of a normal good, he is saying nothing other than that the demand for that particular good rises when income increases and falls when income decreases. Hence, if we find that when income rises, people buy more meals at restaurants, then dining out is defined to be a normal good. For some goods, there is an inverse relationship between quantity demanded and consumer income. That is, when people experience a rise in income, they buy absolutely less o


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