Question

If the quantity demanded of commodity X decreases as the household's income increases, what type of good is X?

Options

• Normal good

• Complementary good

• Substitute good

• Inferior good

Answer 1

Inferior good

Explanation:

An inferior good has a negative income elasticity of demand, which means that as a household’s income rises, demand for this good falls because consumers can now buy better, more expensive replacements. As purchasing power grows, customers naturally shift away from low-cost commodities such as coarse grains or public transportation in favor of higher-quality alternatives, generating a shift to the left in the demand curve for the inferior goods.