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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