The income elasticity of demand of normal goods is

1. Analyze the question The question asks about the sign of income elasticity of demand (YED) for normal goods.

2. Explain the concept Income elasticity of demand measures how the quantity demanded of a good responds to a change in consumers' income:

YED = % change in quantity demanded ÷ % change in income

• Normal goods: demand rises when income rises, so YED is positive. Examples are rice, clothing and phones. • Luxury goods are a type of normal good with YED > 1. • Necessities are normal goods with YED between 0 and 1.
• Inferior goods: demand falls when income rises, so YED is negative. Examples are garri for some households and second-hand clothes (okrika).
• Zero YED: demand does not change with income, as with salt.

3. Step-by-step solution

• Suppose income rises by 10%.
• For a normal good, quantity demanded rises, say by 5%.
• YED = 5% ÷ 10% = +0.5, which is positive.
• Income and demand move in the same direction, so the sign is positive.

4. Check the options

• A. Negative: this describes inferior goods, so it is wrong.
• B. Positive: correct.
• C. Zero: this describes goods whose demand does not depend on income, so it is wrong.
• D. Fixed: elasticity is not a fixed value, so it is wrong.

5. Exam tip Remember: Normal = Navigates the same way as income (positive); Inferior = Inverse (negative). If a question mentions income rising and demand rising, think "positive YED."