The relationship between a consumer's monthly income and monthly consumption of four products,A-D,is shown below. Which product listed is an example of an inferior good?
A) A
B) B
C) C
D) D

Question

The relationship between a consumer's monthly income and monthly consumption of four products,A-D,is shown below.  Which product listed is an example of an inferior good?
A) A 
B) B 
C) C 
D) D

Quizplus · Accepted Answer

An inferior good is a good for which demand decreases as consumer income increases. From the given graph, it can be observed that for product C, as the income increases from $3000 to $4000, the consumption decreases from 8 units to 6 units which implies that it is an inferior good. Thus, option C is the correct choice.

The Relationship Between a Consumer's Monthly Income and Monthly Consumption