Normal Goods

question 16

Multiple Choice

Normal goods

• A) have positive income elasticity of demand.
• B) have negative income elasticity of demand.
• C) have negative elasticity of supply.
• D) are sometimes also inferior goods.
• E) do not have elasticity of demand.

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Definitions:

Nonmarket Participants

Individuals or entities that engage in economic activities outside the formal market, often not reflected in formal economic statistics or analyses.

Externality

An outcome from economic action that affects people who are not directly involved, and this impact can be beneficial or harmful.

Economically Efficient

A state where resources are allocated in a way that maximizes the production of goods and services, with no way to improve someone's condition without worsening another's.

Coase Theorem

A principle stating that if property rights are well-defined and transaction costs are low, parties will negotiate to correct externalities without government intervention.