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 income increases. Based on the graph, product C is the only product that shows a negative correlation between income and consumption, indicating that it is an inferior good. The other products show a positive correlation, indicating they are normal goods.

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