Explanation There are mainly two different types of goods: inferior goods and normal goods. The inferior goods are those goods whose quantity demanded in the economy will decrease, when the income of the consumer increases and the quantity demanded will increase, when the consumer income falls. The normal goods are those goods whose quantity demanded will increase along with an increase in the income and it will decrease, when the income falls. Option (c): Here, when the price of the pasta increases, the demand for pasta will also increase and vice versa. This is the specialty of the inferior goods, and thus pasta is an inferior good. When the price increases, the consumer will substitute the good products with cheaper substitutes. However, when the demand increases the price also increases, it shows that the income effect is greater than the substitution effect. Thus, option 'c' is correct. Option (a): In economics, normal good's quantity demanded will fall, when the income decreases. However, when the price of pasta increases, it increases the demand for the good. Thus, the income effect is greater than the substitution effect, but the consumer behavior shows that the commodity is an inferior good...

The reason behind increased demand, when price of the good rises.

Principles of Microeconomics

7th Edition

ISBN: 9781305156050

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.

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Chapter 21, Problem 5CQQ

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The reason behind increased demand, when price of the good rises.

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