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According to the U.S. Energy Information Administration, the average price of a gallon of gasoline increased from $2.24 in January 2019 to $2.85 in May.
According to the U.S. Energy Information Administration, the average price of a gallon of gasoline increased from $2.24 in January 2019 to $2.85 in May. For the following questions, assume that no factor that affects the demand for gasoline, other than its price, changed during the months from January to May 2019. Source: U.S. Energy Information Administration, "Petroleum and Other Liquids, Weekly U.S. Regular All Formulations Retail Gasoline Prices," eia.gov. Part 2 If households in the United States increased their consumption of gasoline during these months, can we conclude that for these households, gasoline was a normal good? A. No. Given the price of gasoline rose and consumption increased, gasoline must be a Giffen good. All Giffen goods are inferior goods, so we can conclude that gasoline is not a normal good. B. No, but we can conclude that gasoline was a luxury good. C. Yes, we can conclude that gasoline was a normal good. D. No. To conclude that gasoline is a normal good, we would have to know that less gasoline was consumed as the incomes of U.S. households rose
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