Question

Refer to Figure 4.2.2 above. The effect of a decrease in the price of food, as...

Refer to Figure 4.2.2 above. The effect of a decrease in the price of food, as depicted in the figure, leads us to believe that:

A. both food and clothing are inferior goods.

B. food is an inferior good and clothing a normal good.

C. food is a normal good and clothing an inferior good.

D. both food and clothing are normal goods.

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Answer #1

Answer: B

As it clears states that food is an inferior good where as clothing is a normal good .

Food is an inferior good becuase with an increase in economy the demand for food will never increase becuase food is what we consume how much is required.

Clothing is a Normal good because demand increases due to income increase. If a person income increase he will be more inclined to buy clothes than investing more than required amount of food.

So it is clear the effect of decrease in price of food as food is inferior good and clothing is normal good.

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