According to the U.S. Energy Information Administration, the average price of heating oil fell to under $3.00 a gallon during the winter of 2014-2015, the lowest price in more than four years. About 6.2 million U.S. households in the Northeast rely on the fuel to heat their homes. For the following questions, assume that no factor that affects the demand for heating oil, other than its price, changed during the winter of 2014-2015.
a. If households in the Northeast increased their consumption of heating oil in the winter of 2014-2015, can we conclude that for these households, heating oil was a normal good? Briefly explain.
b. If households in the Northeast decreased their consumption of heating oil in the winter of 2014-2015, can we conclude that for these households heating oil is an inferior good? Briefly explain.
c. If households in the Northeast decreased their consumption of heating oil in the winter of 2014-2015, can we conclude that for these households heating oil is a Giffen good? Briefly explain.