When Stanley has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Stanley's income increases to $1,500, he consumes 60 units of good A and 45 units of good B. Which of the following statements is correct?
A)Both goods A and B are normal goods.
B)Both goods A and B are inferior goods.
C)Good A is a normal good, and good B is an inferior good.
D)Good A is an inferior good, and good B is a normal good.

Question

Quizplus · Accepted Answer

Since both the quantity consumed of good A and the quantity consumed of good B increase as income increases, both goods are normal goods. However, since the quantity consumed of good B decreases as income increases, good B is an inferior good. Therefore, choice C is correct.

When Stanley Has an Income of $1,000, He Consumes 30