For each of the following goods, state whether it is a normal good, a luxury, a

ID: 2494691 • Letter: F

Question

For each of the following goods, state whether it is a normal good, a luxury, a necessity, or an inferior good. Explain your answers.

a. Champagne.

A) Normal and necessity. Individuals tend to drink more champagne as their income rises and elasticity is likely greater than 1.

B) Normal and luxury. Individuals tend to drink more champagne as their income rises and elasticity is likely greater than 1.

C) Normal and luxury. Individuals tend to drink more champagne as their income rises and elasticity is likely less than 1.

D) Inferior. Individuals tend to drink significantly less champagne as their income goes up because they will substitute beer for liquor.

Champagne is C) Normal and luxury. Individuals tend to drink more champagne as their income rises and elasticity is likely less than 1.

As the income increases the luxurious good is now more affordable and the demand becomes more inelastic.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.