A market research firm estimates that the income elasticity of demand (YED) for premium organic avocados is +1.5, while the YED for canned instant noodles is -0.4. Which of the following correctly classifies these two goods?
Premium organic avocados are an inferior good, and canned instant noodles are a normal necessity.
Premium organic avocados are a luxury good, and canned instant noodles are an inferior good.
Premium organic avocados are a normal necessity, and canned instant noodles are an inferior good.
Premium organic avocados are a luxury good, and canned instant noodles are a normal necessity.
119 exam-style questions on Edexcel A A Level Economics 1.2.3 Price, income and cross elasticities of demand. Each one has a worked solution and a mark scheme showing where the marks go.