Day: April 24, 2022

Increasing incomes in the UK economy result in a greater demand for clothing at all price levels.

Clothing is therefore best described as?

Select ONE answer:

1. a normal good
2. an inferior good
3. a substitute good
4. a complementary good

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – A normal good has a positive income elasticity of demand. As incomes rise consumers have more disposable income. Consumers are likely to choose to spend the increased.
2. Not correct – inferior goods would see a decrease in demand as consumers switch to more normal goods/it has a negative YED.
3. Not correct – clothing is not being used as an alternative to another product.
4. Not correct – clothing is not directly linked to any other product and clothing can be purchased independently from other goods.

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