Which of the following best describes the relationship between a consumer's income and their demand for a normal good?

• A. As income increases, the demand for a normal good remains unchanged.
• B. As income increases, the demand for a normal good increases.
• C. As income increases, the demand for a normal good decreases.
• D. There is no relationship between income and the demand for a normal good.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definition of a normal good. A normal good is a type of good for which demand increases as the consumer's income increases, holding other factors constant.
2. Step 2: Recall the income effect on demand. When income rises, consumers have more purchasing power, which typically leads to an increase in the quantity demanded of normal goods.
3. Step 3: Contrast normal goods with inferior goods. For inferior goods, demand decreases as income increases, which is the opposite of the behavior of normal goods.
4. Step 4: Analyze the options given. The statement 'As income increases, the demand for a normal good increases' aligns with the definition and typical behavior of normal goods.
5. Step 5: Conclude that the correct relationship is that demand for a normal good rises with an increase in income, reflecting a positive income elasticity of demand.