Jim recently graduated from college.His income increased dramatically;from$5000 a year to $60,000 a year.Jim decided that instead of using the bus,he would buy himself a car.This implies that
A)The car is a normal good for Jim
B)The car is an inferior good for Jim
C)He is equally happy between using the bus and buying a car
D)None of the above

Question

​Jim recently graduated from college.His income increased dramatically;from$5000 a year to $60,000 a year.Jim decided that instead of using the bus,he would buy himself a car.This implies that
A)​The car is a normal good for Jim
B)The car is an inferior good for Jim
C)He is equally happy between using the bus and buying a car
D)​None of the above

Quizplus · Accepted Answer

Jim's increased income led to him choosing to buy a car instead of using the bus, indicating that the car is a normal good for him. A normal good is a product or service for which demand increases as income increases, which is consistent with Jim's behavior.

​Jim Recently Graduated from College

Jim Recently Graduated from College