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An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:_______
A.there are many goods that are substitutes for bicycles.
B.there are many goods that are complementary to bicycles.
C.there are few goods that are substitutes for bicycles.
D. bicycles are normal goods.

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Answer:

Letter D is correct. Bicycles are normal goods.

Explanation:

Normal goods are characterized as those that increase the quantity demanded from a scenario where there is an increase in income. Therefore, the relationship between consumption of a normal good and income is directly proportional, which means that the income elasticity of demand for normal goods will always be positive.

These goods are the majority of goods in the economy, some examples of normal goods are: clothes, perfumes, computers, vehicles, cell phones and others.

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