If the average annual income rises from Rs 20,000 to Rs 22,000 and the yearly quantity demanded increases from 5,000 to 6,000 units, which statement is accurate?

Show Answers

The demand is insensitive to price changesThis item is considered an inferior goodThe income elasticity equals -2The good is classified as normalNone of the above

Explanation

An increase in income leads to a rise in quantity demanded, indicating the good is normal. If the good were inferior, demand would decrease as income increases. Hence, option D is correct.