If the income elasticity coefficient is positive, then the good is a(n) ____ good.

• A. inferior
• B. Giffen
• C. complementary
• D. normal

Answer: (D)

Verified step by step guidance

1. Understand the concept of income elasticity of demand, which measures how the quantity demanded of a good responds to a change in consumer income. It is calculated as \(\text{Income Elasticity} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in income}}\).
2. Recall that if the income elasticity coefficient is positive, it means that as income increases, the quantity demanded for the good also increases.
3. Recognize that goods with a positive income elasticity are classified as 'normal goods' because demand rises with income.
4. Contrast this with inferior goods, which have a negative income elasticity (demand decreases as income rises), and Giffen goods, which are a special type of inferior good with upward-sloping demand curves due to strong income effects.
5. Note that complementary goods relate to cross-price elasticity, not income elasticity, so they are not classified based on income elasticity coefficients.