Demand p2

Question 1

Disposable Income

Answer 1

The income a consumer has to spend after income tax is paid. Income – income tax.

Question 2

Inferior Goods

Answer 2

Goods that are demanded less when a consumer’s income increases.

Question 3

Normal Goods

Answer 3

Goods that are demanded more when a consumer’s income increases.

Question 4

Luxury Goods

Answer 4

Goods that are demanded more when there is a significant increase in a consumer’s income (an extreme type of normal good).

Question 5

Opportunity Cost

Answer 5

The next best alternative foregone; your second choice you have given up.