When Jamar has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Jamar's income decreases to $1,500, he consumes 33 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

When Jamar's income decreases, his consumption of good A increases while his consumption of good B decreases. This indicates that good A is an inferior good (consumed more as income decreases) and good B is a normal good (consumed less as income decreases).

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