Question

When incomes are rising, new SUV sales increase while used SUV sales decrease. This indicates that ____

(A) used SUVs and new SUVs are both normal goods.
(B) used SUVs are inferior goods and new SUVs are normal goods.
(C) used SUVs and new SUVs are complements.
(D) used SUVs and new SUVs are substitutes.
(E) used SUVs are normal goods and new SUVs are inferior goods.

Answer 1

The correct answer is B

Step-by-step explanation:

As the income is rising, the sale of the used SUV sales decrease, which means that the used SUV is an inferior good as the inferior goods are those goods whose demand decreases when the income of the consumer rises. And on the other hand, new SUV sales increases as the income rises. Therefore, new SUV become normal good.