2025 · Q11
Which among the following regarding the nature of goods and income elasticity are correctly matched? Nature of Goods Income Elasticity
- 1Necessity Between 0 and 1
- 2Luxury More than 1
- 3Inferior More than 0 Select the answer using the code given below.
indian-polity-economyeconomy-fundamentals
- A1 and 3 only
- B2 and 3 only
- C1 and 2 only
- D1, 2 and 3
Explanation
Income elasticity of demand is between 0 and 1 for necessities (positive but inelastic) and greater than 1 for luxuries, so statements 1 and 2 are correctly matched. Inferior goods have negative income elasticity — demand falls as income rises — not 'more than 0', so statement 3 is wrongly matched. Hence only 1 and 2 are correctly matched.