New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    As a result of an increase in consumer incomes, the

    demand for XYZ good has decreased. Based on this information, what can we definitely say about what type of good XYZ is?
    A It is a normal good Correct Answer Incorrect Answer
    B It has many substitutes Correct Answer Incorrect Answer
    C It is a substitute good Correct Answer Incorrect Answer
    D It is an inferior good Correct Answer Incorrect Answer

    Solution

    Inferior goods are goods whose demand is reduced with increasing consumer income. Inferior goods are very low-priced goods and are of much lower quality related to other goods. Income growth allows the consumer to change their choices and buy substitutes of superior quality.

    Practice Next