2015 · Q87
In view of the fact that kerosene is an inferior good in India, what is/are its implication(s)?
- 1As households get richer, they consume less kerosene.
- 2Over time there is a decline in quality of kerosene.
- 3Government needs to stop subsidies on kerosene.
Select the correct answer using the code given below.
General KnowledgeIndian Economy
- A1 only
- B1 and 2 only
- C2 and 3 only
- D1, 2 and 3
Explanation
Kerosene is an inferior good in India: as households grow richer they switch to LPG and electricity and consume less kerosene — that is the only implication that follows, statement 1. Inferiority says nothing about the quality of kerosene declining (2), nor does it by itself dictate that the government must stop subsidizing it (3), which is a separate policy decision. Hence 1 only.