Normal Goods Have Negative Income Elasticities of Demand, While Inferior

question 5

True/False

Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand.

---

Definitions:

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others, leading to specialized production and trade benefits.

Specialization

The practice of focusing effort and resources on a specific task, area of knowledge, or market segment to increase efficiency and proficiency.

Comparative Advantage

The proficiency of an individual, a business, or a nation in generating a product or executing a service at a more economical opportunity cost than its competitors.

Lower Cost

Refers to a situation or strategy in which expenses are minimized or reduced.