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If, as people’s income increases, the quantity demanded of a good decreases, the good is called
- a)a substitute
- b)a normal good
- c)an inferior good
- d)a complement
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
If, as peoples income increases, the quantity demanded of a good decre...
The answer is option 'C', an inferior good. Let's break down why:
Definition of an Inferior Good:
An inferior good is a type of good that people demand less of as their income increases. This is because as people's income increases, they can afford to buy more expensive and higher quality goods, and they no longer have to settle for lower quality, cheaper goods.
Explanation of the Answer:
If the quantity demanded of a good decreases as income increases, it means that the good is of lower quality or cheaper than other goods that people can now afford. This is because people would no longer have to settle for inferior goods if they had the means to purchase better quality goods. Therefore, the good in question is an inferior good.
Example:
A common example of an inferior good is instant noodles. As people's income increases, they would be able to afford better quality food and no longer have to rely on instant noodles as their main source of sustenance. Therefore, the quantity demanded of instant noodles would decrease as income increases.
Conclusion:
In conclusion, if the quantity demanded of a good decreases as income increases, the good is called an inferior good. This is because people would no longer have to settle for lower quality or cheaper goods if they can afford better quality goods.
Definition of an Inferior Good:
An inferior good is a type of good that people demand less of as their income increases. This is because as people's income increases, they can afford to buy more expensive and higher quality goods, and they no longer have to settle for lower quality, cheaper goods.
Explanation of the Answer:
If the quantity demanded of a good decreases as income increases, it means that the good is of lower quality or cheaper than other goods that people can now afford. This is because people would no longer have to settle for inferior goods if they had the means to purchase better quality goods. Therefore, the good in question is an inferior good.
Example:
A common example of an inferior good is instant noodles. As people's income increases, they would be able to afford better quality food and no longer have to rely on instant noodles as their main source of sustenance. Therefore, the quantity demanded of instant noodles would decrease as income increases.
Conclusion:
In conclusion, if the quantity demanded of a good decreases as income increases, the good is called an inferior good. This is because people would no longer have to settle for lower quality or cheaper goods if they can afford better quality goods.
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If, as peoples income increases, the quantity demanded of a good decreases, the good is calleda)a substituteb)a normal goodc)an inferior goodd)a complementCorrect answer is option 'C'. Can you explain this answer?
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If, as peoples income increases, the quantity demanded of a good decreases, the good is calleda)a substituteb)a normal goodc)an inferior goodd)a complementCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If, as peoples income increases, the quantity demanded of a good decreases, the good is calleda)a substituteb)a normal goodc)an inferior goodd)a complementCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If, as peoples income increases, the quantity demanded of a good decreases, the good is calleda)a substituteb)a normal goodc)an inferior goodd)a complementCorrect answer is option 'C'. Can you explain this answer?.
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