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Goods whose quantity demanded rises only up to a certain level of income and then decreases as money income rises beyond that level are classified as which type of goods?
ASpeculative goods
BLuxury goods
CComplementary goods
DInferior goods
Answer & Solution
Correct answer: D. Inferior goods
1. Normal goods are demanded in increasing quantities as income rises.
2. Some goods are demanded more only up to a certain income and then less as income rises further.
3. These are defined as inferior goods.
4. Luxury goods, by contrast, keep rising with income, so the answer is inferior goods.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.3_
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