Which of the following best describes a normal good?

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Understanding how demand responds to income is key. A normal good is one whose demand rises when income increases and falls when income decreases. An inferior good behaves in the opposite way: as people’s incomes rise, they buy less of it and substitute toward more costly or higher-quality options. The statement chosen matches this by saying normal goods have higher demand as income rises and inferior goods have lower demand as income rises.

It’s worth noting that normal goods aren’t necessarily luxuries; many are necessities (like basic food or essential clothing), and some inferior goods can still be desired at lower incomes (like cheaper substitutes). The other choices misstate this relationship or overgeneralize: some goods don’t fit the “no-income-effect” claim, and assuming normals must be luxuries or inferiors must be necessities isn’t accurate.