Classification of goods based on Income Elasticity of Demand ($\eta_i$):

• Normal goods: Commodities whose consumption increases with rising income; hence income elasticity is positive ($\eta_i \gt 0$) -> (IV)
• Luxury goods: Goods for which demand increases more than proportionately to income; hence income elasticity is greater than one ($\eta_i \gt 1$) -> (III)
• Necessary goods: Essential staples whose demand increases less than proportionately to income; elasticity lies between 0 and 1 ($0 \lt \eta_i \lt 1$) -> (II)
• Inferior goods: Goods whose consumption decreases as real consumer income rises; income elasticity is negative ($\eta_i \lt 0$) -> (I)
  Correct match: (A)-(IV), (B)-(III), (C)-(II), (D)-(I).

Historical origin of economic terms:

• Adam Smith: Known as the Father of Economics, authored 'Wealth of Nations' (1776).
• Alfred Marshall: Pioneered microeconomic neoclassical tools such as elasticity of demand and consumer surplus.
• Ragnar Frisch (Correct): Norwegian economist Ragnar Frisch introduced and coined the words 'microeconomics' and 'macroeconomics' in 1933. He shared the first Nobel Memorial Prize in Economic Sciences with Jan Tinbergen in 1969.
• J. S. Mill: Major 19th-century classical philosopher and political economist.

Price elasticity of demand ($e_p$) calculation:

• Formula: $e_p = \frac{\Delta Q / Q_1}{\Delta P / P_1}$
• Initial quantity $Q_1 = 25\text{ kg}$, New quantity $Q_2 = 20\text{ kg} \implies \Delta Q = 20 - 25 = -5\text{ kg}$.
• Percentage change in quantity demanded: $\frac{-5}{25} \times 100 = -20\%$.
• Initial price $P_1 = 20$, New price $P_2 = 23 \implies \Delta P = 23 - 20 = 3$.
• Percentage change in price: $\frac{3}{20} \times 100 = 15\%$.
  (F) Therefore, $e_p = \frac{-20\%}{15\%} = -1.33$ (reported as $-1.33\%$ in the question).

Cross-price elasticity of demand ($e_{xy}$):

• Cross elasticity measures the responsiveness of quantity demanded of good $X$ to a change in the price of good $Y$: $e_{xy} = \frac{\%\Delta Q_x}{\%\Delta P_y}$.
• For substitute commodities (e.g., tea and coffee), an increase in the price of good $Y$ causes consumers to substitute toward good $X$, increasing $Q_x$. Both variables move in the same direction, making the cross elasticity positive.
• For complementary goods, it is negative; for unrelated goods, it is zero.