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In: Economics

T or F question If a good is a normal good, does the demand function must...

T or F question

If a good is a normal good, does the demand function must have a negative slope?

If a good is inferior, does the demand function must have a positive slope?

interpret your answer, please.

Solutions

Expert Solution

Yes if a good is a normal goods then it must have a negative slope because normal goods are those goods for which demand will rise when consumer income will rise. So if consumer income remain same then if price of goods increases the demand for the goods will fall to remain in the given income or budget. So the demand function which shows relationships between price of goods and quantity demanded by consumers will always have a negative slope.

Yes if a goods is inferior then the demand function must have a positive slope. Inferior goods are those for which demand will fall when income rises because consumers will moves towards a better goods. So when price of inferior goods decreases consumer experience a rise in real income and will move towards a better goods and this way demand for good will also decreases. So in this way demand function will have a positive slope.

Rahul Sunny answered 2 years ago
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