Question

What would happen to demand for normal goods with rise in income?

• A. Increase
• B. Decrease
• C. Remain constant
• D. All of these

Hint:

For normal goods, an increase in income leads to an increase in demand.

Answer 1

The Correct Option is A

Step 1: Understanding the relationship between income and demand.
For normal goods, there is a positive relationship between income and demand. As income rises, consumers have more purchasing power, and thus, the demand for normal goods tends to increase.

Step 2: Analyzing the options.
(A) Increase: Correct. When income rises, demand for normal goods increases because consumers are able to afford more of the goods.
(B) Decrease: This is incorrect for normal goods. A rise in income typically leads to an increase in demand for normal goods.
(C) Remain constant: This is incorrect for normal goods, as demand is expected to change with income.
(D) All of these: This option is incorrect because only the increase in demand is the correct response for normal goods.

Step 3: Conclusion.
The correct answer is (A) Increase, as demand for normal goods increases when income rises.