A market research firm observes that when the average household income in a region rises from £32,000 to £36,000, the weekly quantity demanded of premium organic sourdough bread increases from 1,200 loaves to 1,440 loaves, while its price remains constant. Over the same period, the price of artisanal salted butter (a related good) increases by 15%, causing the weekly quantity demanded of this sourdough bread to decrease by 6% (holding all other factors constant).
Based on this data, which of the following statements correctly classifies premium organic sourdough bread?
An inferior good because its income elasticity of demand is −1.6-1.6−1.6, and a complement to artisanal butter because their cross-price elasticity of demand is −0.4-0.4−0.4.
An income-elastic normal (luxury) good because its income elasticity of demand is +1.6+1.6+1.6, and a complement to artisanal butter because their cross-price elasticity of demand is −0.4-0.4−0.4.
An income-inelastic normal (necessity) good because its income elasticity of demand is +0.625+0.625+0.625, and a substitute for artisanal butter because their cross-price elasticity of demand is +0.4+0.4+0.4.
An income-elastic normal (luxury) good because its income elasticity of demand is +1.6+1.6+1.6, and a substitute for artisanal butter because their cross-price elasticity of demand is +2.5+2.5+2.5.
