What kind of relationship exists between income and demand in the case of normal goods?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. There is a direct relationship.
- In the case of normal goods, income, and demand are directly related.
- If income increases then that will cause demand to rise and a decrease in income causes demand to fall.
- For example, technology products, and leisure services are normal goods that are highly demandable in nature by considering the super quality.
- So, we can say that the change in income causes a positive change in demand for normal goods.