When the economy turns down and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon?

Question

Quizplus · Accepted Answer

An inferior good is one where the demand decreases as income increases, while a normal good is one where the demand increases as income increases. When incomes decrease, people are more likely to switch to cheaper substitutes, which in this case would be travel by car, which is an inferior good. On the other hand, air travel is a normal good, since demand for it would increase as incomes increase. Therefore, option C is the most suitable option, as it states that air travel is a normal good and travel by car is an inferior good, which aligns with the phenomenon observed.

When the Economy Turns Down and the Incomes of Many