When a 31% increase in income results in a 32% increase in the quantity demanded of spam, what can be concluded about spam?

The situation described involves a 31% increase in income leading to a 32% increase in the quantity demanded of spam. This behavior is indicative of a normal good. Normal goods are defined as those for which demand increases when consumer income rises. The increase in demand is proportionally higher than the increase in income, confirming that as people have more income, they choose to purchase more spam.

In contrast, inferior goods would see a decrease in demand as income rises, because consumers would switch to higher-quality substitutes. Luxury goods may also experience increased demand with rising income, but they are usually characterized by a stronger proportional increase in demand relative to income increases and are often considered higher-priced items.

Giffen goods, on the other hand, would demonstrate an increase in demand when the price of the good rises, violating the basic law of demand, but that is unrelated to income effects in this scenario.

The evidence clearly positions spam as a normal good due to the positive correlation between income and quantity demanded. This understanding is crucial in microeconomics, particularly when analyzing consumer behavior regarding income changes.