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ViewZoom Insert Table Chart Text hape Mecia Comment Format Document ECO 2023.003 Homework1 Economics HW 1 1. Consider the following demand schedules for goods A and B at two different levels of income. Style Good A Good B Income = 20,000 Price Quantity Price 20 Income 50,000 Income = 20,000 Income 50,000 Trebuchet MS Quantity Price Quantity Price 50 100 150 200 e Quantity 20 16 pt 50 30 130 90 30 30 180 Character StylesNone 120 20 Alignment Which good(s) are normal? Which good(s) are inferior? Briefly explain how you come to your conclusions. spacing 1.1 Bullets & Lists None 87 words

Solution

Good B is a normal good. A good is called a normal good if the demand for that good increases at each price when income increases. It is seen from the table that when income increases from $20,000 to $50,000, the demand for good B increase at each price levels. Thus, good B is a normal good.

Good A is an inferior good. A good is called a inferior good if the demand for that good decreases at each price when income increases. It is seen from the table that when income increases from $20,000 to $50,000, the demand for good A decrease at each price levels. Thus, good A is an inferior good.