If an increase in income results in a decrease in the demand for Honda Civics, then Honda Civics are considered:

Question

Quizplus · Accepted Answer

According to the law of demand, as income increases, the demand for normal goods (goods for which demand increases as income increases) also increases. But in the case of Honda Civics, a decrease in demand is observed when income increases, which means it is an inferior good. An inferior good is a good for which demand decreases as income increases. Therefore, the correct answer is B) inferior goods.

If an Increase in Income Results in a Decrease in the Demand