When Matt has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Matt's income increases to $3,000, he consumes 25 units of good A and 95 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

When Matt's income increased, his consumption of good A decreased, indicating that good A is an inferior good. On the other hand, his consumption of good B increased, indicating that good B is a normal good. Therefore, the correct answer is D, which states that Good A is an inferior good and Good B is a normal good.

When Matt Has an Income of $2,000, He Consumes 30