A good that is considered to be inferior to a consumer, may be observed as normal good to the another consumer. This is due to _______.
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : Income of the consumer
- A good is considered inferior or normal depending on the income level of the consumer.
- Inferior goods are those whose demand decreases as income increases because consumers shift to better alternatives. However, for a lower-income consumer, the same good might still be a preferred choice.
- Normal goods are those whose demand increases as income increases.