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If income rises from N200.00 to N250.00 and the amount spent on good X fails...

Economics
JAMB 1982

If income rises from N200.00 to N250.00 and the amount spent on good X fails from N30.00 to N28.00, then good X is

  • A. an income elastic good
  • B. a normal good
  • C. an inferior good
  • D. demand elastic
  • E. supply elastic
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Correct Answer: Option C
Explanation

Since income has increased but spending on good X has decreased, this suggests that good X is not a normal good (which would typically see an increase in spending as income rises). Instead, the decrease in spending indicates that good X is likely an inferior good, meaning that as people's income increases, they tend to buy less of this good.


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