Normal good is defined as: As income rises, demand for the good rises.

• A. A good whose demand falls when income rises
• B. A good whose demand rises when income rises
• C. A good whose price elasticity is negative
• D. A good that is always inferior

Answer: (B)

The idea being tested is how demand responds to changes in income for normal goods. A normal good is one whose demand increases as income rises, so as people have more money, they buy more of it. This positive relationship is why the statement describing a good whose demand rises when income rises is the correct description. When income goes up, the quantity demanded at each price tends to grow, and the demand curve shifts to the right.

The other descriptions don’t fit this concept: a good whose demand falls as income rises describes an inferior good, not a normal one. A good with negative price elasticity relates to how quantity demanded responds to price changes, not income, so it doesn’t define normal vs. inferior. And calling a good “always inferior” contradicts the defining feature of a normal good, which is that demand increases with income.