QUESTION 1
A) Normal goods: fit in to (Paul A. Samuelsson 2010, pg 84) an economic term used to explain Goods for which its demand join ons as income subjoins and falls as its income decreases but the price remains constant. In order terms a good is median(prenominal) when its phthisis increases when the income increases , as the income of an frugality increases there allow for be increase in the demand for more goods and services, an example in luxury goods as the income increases the demand for such kinds of product will overly increase. Example of normal goods includes tender simple machines, new cloths or new equipments.
Inferior goods: These goods for which demand lightes as the level of income in the economy raises, the consumption of insufficient goods decrease. Inferior goods are any goods that consumers will demand little if there was a increase in their income level. Example of inferior goods includes, used cloths, second-hand car.
B) In my opinion a slew slating is an inferior good, because from the definition of inferior goods which says inferior goods is any good that a consumer will demand less of if there was an increase in income level.
An individual will tho have need or consider a bus ticket instead of driving his or his own car in order to cut down cost to make use of a less expensive form of expatriation due to less income, so yes a bus ticket is an inferior good.
C) An income increase would mean increased demand for product A which is an indication that product A is a normal good while the demand for product B would diminish due to increase in income, although they are both qualify product increase income would increase demand A as consumers income increase his preference for more costly goods will increase as such doing away with the substitute while B diminishes because its an inferior good..
QUESTION 2
A) Price cracking of demand (PED) : According to investopidia price elasticity of demand so-and-so be...If you want to get a full essay, order it on our website: Orderessay
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