Figure: Four Panel 2 Which of the four panels shows an increase in income on an inferior good?
A) Panel A
B) Panel B
C) Panel C
D) Panel D

Question

Figure: Four Panel 2  Which of the four panels shows an increase in income on an inferior good?
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Quizplus · Accepted Answer

In panel A, the quantity demanded of the inferior good (ramen) increases as income decreases, indicating that ramen is an inferior good. Additionally, the total expenditure on ramen increases, indicating an increase in income. Therefore, panel A shows an increase in income on an inferior good. Panels B, C, and D all show regular goods because the quantity demanded decreases as income decreases.

Figure: Four Panel 2 Which of the Four Panels