An increase in Abigail's income decreases her demand for cassette tapes. What type of good are cassette tapes?

An increase in Abigail's income decreases her demand for cassette tapes. What type of good are cassette tapes?

• A. Inferior good.
• B. Normal good.
• C. Complement to any good.
• D. Substitute good.

Answer: (A)

When income rises, demand falls for goods that are considered inferior. An inferior good is one whose quantity demanded decreases as households’ purchasing power increases, as people substitute towards better or more preferred options. In this scenario, Abigail buys fewer cassette tapes as her income goes up, so cassette tapes are an inferior good. The other options don’t fit this pattern: a normal good would see higher demand with more income, and a complement or substitute describes relationships with other goods, not how demand responds to income changes.

When income rises, demand falls for goods that are considered inferior. An inferior good is one whose quantity demanded decreases as households’ purchasing power increases, as people substitute towards better or more preferred options. In this scenario, Abigail buys fewer cassette tapes as her income goes up, so cassette tapes are an inferior good. The other options don’t fit this pattern: a normal good would see higher demand with more income, and a complement or substitute describes relationships with other goods, not how demand responds to income changes.