ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead.

Detailed explanation-2: -In the case of inferior goods income and demand are inversely related, which means that an increase in income leads to a decrease in demand and a decrease in income leads to an increase in demand. For example, necessities like bread and rice are often inferior goods.

Detailed explanation-3: -Inferior goods are goods for which demand declines as consumers’ real incomes rise, or rises as incomes fall. Consumers with more money may opt to buy more expensive substitutes instead of what they could afford only when incomes were lower.

Detailed explanation-4: -As consumers’ incomes increase, people have more money to spend. This means that demand for many goods and services will increase as consumers look to spend their extra money. They might buy upgraded versions of products they already have, eg a new car, or take an expensive holiday.

Detailed explanation-5: -Answer and Explanation: The answer is c. A normal good is a product that consumers will purchase more of when they have an increase in their incomes. In other words, an increase in consumers’ incomes will increase the demand for normal goods.