ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Low grade rice
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salt
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bungalore
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furniture
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Detailed explanation-1: -An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise.
Detailed explanation-2: -An inferior good is a good that consumers demand less of when their income increases.
Detailed explanation-3: -Inferior goods rely on the disposable income of consumers. The term “inferior goods” doesn’t refer to poor quality but instead refers to their price point. Other types of goods become more in demand than inferior goods when consumers have more disposable income.
Detailed explanation-4: -Thus rice and wheat are normal goods. Inferior Goods :-Inferior goods are low quality products and their demand decreases when the income of the consumer increases and vice versa.
Detailed explanation-5: -As we noted, the demand for rice rose from 40 kg to 43 kg despite its increase in price. Therefore, rice is an example of a Giffen good.