Spending on motoring as a % of household expenditure in the UK shows that motoring is ?
Correct answer: D. a superior good
- A. Environmentally damaging
- B. an inferior good
- C. a potential public good
- D. a superior good
Explanation
If motoring takes a larger share of household expenditure as income rises, its income elasticity is positive and greater than one, making it a superior or luxury-type good. An inferior good would take a smaller share as income increased.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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