Chapter 5, Problem 5MCQ

To determine

The type of goods where an increase in the income of consumers leads to the decrease of a product.

Explanation of Solution

A good is considered inferior when its demand falls with an increase in the income of consumers.

Grocery products, instant foods like a noodle, and certain frozen foods are examples of normal goods.

So, an increase in income leads to lower demand for inferior goods.

Option “c” is correct.

The other options are incorrect because:

• A change in income doesn’t change the demand for relative goods. A change in the prices of relative goods can affect the demand for the original good.
• An increase in income will increase the demand for normal and abnormal (for example, luxury goods).