As Miles’s income increases, his demand for fitness club memberships increases. What type of good are fitness club memberships for William? For William, fitness club memberships are
A. an inferior good
B. a normal good
C. a substitute
D. a complement
The correct answer and explanation is:
The correct answer is B. a normal good.
A normal good is defined as a type of good for which demand increases when income increases. This is in contrast to an inferior good, where demand decreases as income rises. In the scenario provided, as Miles’s income increases, his demand for fitness club memberships also increases, which indicates that fitness club memberships are a normal good for him.
When individuals experience an increase in their income, they often have more disposable income to spend on non-essential goods and services, such as fitness club memberships. This behavior is characteristic of normal goods, where people tend to demand more as they can afford to spend more. In contrast, inferior goods are typically items that people purchase more of when their income is lower because they are often cheaper alternatives to higher-quality products. As income rises, individuals generally reduce their consumption of inferior goods in favor of more expensive and higher-quality options.
Fitness club memberships are often seen as a normal good because they are considered a luxury or non-essential service. People may choose to join a gym or fitness club when they feel financially comfortable and are more likely to spend on health and fitness activities. For many, the decision to purchase a fitness membership correlates with having enough disposable income to prioritize physical health and well-being over other necessities.
Thus, in this case, since Miles demands more fitness club memberships as his income increases, it is clear that these memberships are a normal good for him.