in the two-period model, if consumption in both periods is a normal good, then an increase in income in period two: does not increase consumption in either period. increases consumption in period one only. increases consumption in period two only. increases consumption in both periods.

Question

Business

Hudson Melton

15 December, 07:13

in the two-period model, if consumption in both periods is a normal good, then an increase in income in period two: does not increase consumption in either period. increases consumption in period one only. increases consumption in period two only. increases consumption in both periods.

+4

Answers (1)

Know the Answer?

Paityn Macdonald · Answer 1

increases consumption in both periods.

Explanation:

A normal good is any product or service whose demand increases as consumers' income increases. The demand for a normal good will also increase due to the improvement in economic conditions in an economy.

A normal good is regarded to be of high utility value. Its consumption provides consumers with greater satisfaction. As a result, if consumer's income increase, demand for normal goods increases. Should consumption increase in a period, the demand will increase. The demand will continue to rise if incomes increase.