Asked by Maria Clara on Jun 11, 2024
Verified
An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that
A) there are many goods that are substitutes for bicycles.
B) there are many goods that are complementary to bicycles.
C) there are few goods that are substitutes for bicycles.
D) bicycles are normal goods.
Substitute Goods
Products or services that can be used in place of one another, fulfilling the same needs or wants of the consumer.
Normal Goods
Goods for which demand increases as the income of the consumer increases, exhibiting a direct relationship between income and demand.
- Examine the impact of variations in consumer income on the demand for different categories of goods.
- Determine how variations in price influence the demand for products and examine the interrelationships among goods including complements, substitutes, normal, and inferior goods.
Verified Answer
LS
Luke Sergei WarchockiJun 12, 2024
Final Answer :
D
Explanation :
The economist's prediction assumes that bicycles are normal goods, meaning that as consumer incomes rise, they will have more disposable income to spend on goods like bicycles. If bicycles were inferior goods, the opposite would be predicted, as consumers would switch to higher quality goods as their incomes rise. The existence of substitutes or complements is not relevant to this prediction, as it assumes all else is held equal.
Learning Objectives
- Examine the impact of variations in consumer income on the demand for different categories of goods.
- Determine how variations in price influence the demand for products and examine the interrelationships among goods including complements, substitutes, normal, and inferior goods.
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