8. Suppose there are 2 goods in the economy and the demand function for Good 1 is given by m P₁ + ap₂ Is this a normal or inferior good? What if the demand function was instead given by xi (m, P₁, P₂) = xi(m, p₁, P₂) = P₁ m + ap₂

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A:

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Q: 05- Income and Substitution Effects Question 7

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Q: #8

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A: Answer -

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A: It tells the inverse relation between quantity and price of the commodity.

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.