The correct option is
C. inferior.
Explanation of the Correct Answer
- Understanding Inferior Goods:
- Inferior goods are defined as goods for which demand increases when consumer incomes fall, and conversely, demand decreases when consumer incomes rise. This is contrary to normal goods, where demand increases with rising incomes and decreases with falling incomes.
-
In the context of the question, if the price of a commodity falls but the quantity purchased does not rise, it suggests that consumers are not responding to the price decrease in the expected way. This behavior is characteristic of inferior goods.
-
Price Elasticity of Demand:
- Price elasticity of demand measures how much the quantity demanded of a good responds to a change in price. For normal goods, we typically expect that a decrease in price will lead to an increase in quantity demanded (i.e., they have a positive price elasticity).
-
However, for inferior goods, the relationship can be more complex. If consumers perceive that they can afford better alternatives (normal goods) when prices fall, they may not increase their consumption of the inferior good, even if its price has decreased.
-
Consumer Behavior:
- When the price of an inferior good falls, consumers may choose to buy less of it because they can now afford to purchase higher-quality substitutes. This behavior indicates that the good is inferior, as the demand does not increase with a decrease in price.
Why the Other Options Are Incorrect
- A. Normal:
-
Normal goods are those for which demand increases as income increases and typically also when prices decrease. If the price falls and the quantity purchased does not rise, it contradicts the definition of normal goods. Therefore, this option is incorrect.
-
B. Abnormal:
-
The term "abnormal" is not a standard classification in economics for goods based on demand and price changes. It does not provide a clear economic definition or context, making it an unsuitable choice.
-
D. Superior:
- Superior goods, often referred to as luxury goods, are those that see an increase in demand as consumer incomes rise. Similar to normal goods, they would typically see an increase in quantity demanded when prices fall. Thus, this option is also incorrect as it does not align with the behavior described in the question.
Summary of Key Concepts
- Inferior Goods: Demand increases when income decreases; demand may not rise with a price decrease if consumers switch to better alternatives.
- Normal Goods: Demand increases with both income and price decreases; contradicts the scenario in the question.
- Price Elasticity: Understanding how quantity demanded responds to price changes is crucial in determining the type of good.
- Consumer Behavior: Choices made by consumers in response to price changes can indicate the nature of the goods they are purchasing.
Revision Summary
- Inferior goods see demand decrease when income rises, and their quantity purchased may not increase with a price drop.
- Normal goods typically see an increase in quantity demanded when prices fall.
- The concept of price elasticity helps understand consumer responses to price changes.
- Recognizing consumer behavior patterns is essential in identifying the type of goods based on demand changes.