Question

The figure above illustrates the effect of the change in the price of food on Meghdad's consumption of food and clothing. Suppose price of clothing is $ 1. Which of the following statements is correct?

A. Food is an inferior good for him, and his surplus increased by $6 based on consumption variation measure.
B. Food is an inferior good for him, and his surplus increased by $9 based on consumption variation measure.
C. Food is a normal good for him, and his surplus decreased by $9 based on the consumption variation measure.
D. Food is a normal good for him, and his surplus decreased by $6 based on the consumption variation measure.

Answer 1

The correct statement is A. Food is an inferior good for Meghdad, and his surplus increased by $6 based on the consumption variation measure.

Step-by-step explanation:

Based on the information given, we can determine that Food is an inferior good for Meghdad. An inferior good is a good that people consume less of as their income increases. In this case, when the price of food decreases, Meghdad's consumption of food increases while his consumption of clothing decreases. Therefore, the correct statement is A. Food is an inferior good for him, and his surplus increased by $6 based on consumption variation measure.