The following table shows a demand schedule for a normal good. $$ \begin{array}{|c|c|} \hline \text { Price } & \text { Quantity demanded } \\ \hline \$ 23 & 70 \\\ 21 & 90 \\\ 19 & 110 \\\ 17 & 130 \end{array} $$ a. Do you think that the increase in quantity demanded (say, from 90 to 110 in the table) when price decreases (from \(\$ 21\) to \(\$ 19)\) is due to a rise in consumers' income? Explain clearly (and briefly) why or why not. b. Now suppose that the good is an inferior good. Would the demand schedule still be valid for an inferior good? c. Lastly, assume you do not know whether the good is normal or inferior. Devise an experiment that would allow you to determine which one it was. Explain.

: An increase in consumer's income is just one of the factors that can cause a change in the quantity demanded. Other factors, such as preferences, prices of related goods, and expectations of future prices, can also impact the quantity demanded. From the given demand schedule, we can see that the quantity demanded increases as prices decrease. This is consistent with the law of demand, which states that the quantity demanded of a good is inversely proportional to its price. In this case, there is no information provided about consumers' incomes. Since the change observed in the demand schedule is directly due to a decrease in price and we were not given any information on income changes, we cannot assume that the increase in quantity demanded is due to a rise in consumers' income.

: A normal good is a good for which demand increases as income increases, and demand decreases as income decreases. An inferior good, on the other hand, is a good for which demand decreases as income increases and demand increases as income decreases. The demand schedule provided only gives information on the relationship between price and quantity demanded. This information on the table alone is not enough to determine whether the good is normal or inferior. However, we know that both normal and inferior goods still follow the law of demand; as the price falls, the quantity demanded rises. Thus, the demand schedule would still be valid for an inferior good as it follows the law of demand.

: To determine whether the good is normal or inferior, we need to examine the relationship between consumer income and quantity demanded. An experiment can be designed to observe the changes in quantity demanded for different levels of consumers' incomes. 1. Collect data on a sample of consumers who purchase the good. This data should include information on their income levels and the quantity of the good they purchased in a given time frame. 2. Divide the sample of consumers into different income groups, such as low, middle, and high income. 3. Determine the average quantity of the good purchased in each income group. 4. Compare the average quantity demanded across the different income groups to observe the relationship between income and quantity demanded. If the average quantity demanded increases as income increases, then the good is a normal good. However, if the average quantity demanded decreases as income increases, then the good is an inferior good.