Question : Assertion: Inferior goods have a positive income elasticity of demand.
Reason: Inferior goods are less desirable as income increases, leading to a decrease in demand.
Option 1: Both the assertion and reason are correct and related.
Option 2: Both the assertion and reason are correct but not related.
Option 3: The assertion is correct, but the reason is incorrect.
Option 4: The assertion is incorrect, but the reason is correct.
Correct Answer: The assertion is correct, but the reason is incorrect.
Solution : The correct answer is (C) The assertion is correct, but the reason is incorrect.
The assertion states that inferior goods have a positive income elasticity of demand. This is incorrect. Inferior goods have a negative income elasticity of demand. Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. For inferior goods, as income increases, the demand for these goods actually decreases. Therefore, the income elasticity of demand for inferior goods is negative.
The reason provided states that inferior goods are less desirable as income increases, leading to a decrease in demand. This is correct and provides a valid explanation for the behavior of inferior goods. However, it is not directly related to the assertion because the income elasticity of demand for inferior goods is negative, not positive.
