Question

Jim recently graduated from college. His income increased dramatically;from$5000 a year to $60,000 a year. Jim decides that instead of using the bus, he would buy a car. This implies that a. ​The car is an inferior goods for Jim b. ​The bus and the car are complementary for Jim c. ​Need information on the price of cars d. ​The car is a normal goods for Jim

Answer 1

Answer: d. ​The car is a normal goods for Jim

Explanation: if an individual's income goes up by a certain percentage or amount and, in response, the quantity demanded of good rises by rises in response to the income increase, such good can be considered a normal good. It is also defined as such good for which the income elasticity of demand is positive but less than one. This is the same scenario that has happened with Jim. His demand for better automobile increased as a result of an increase in his income.