Final answer:
When Sophia buys less of good X after receiving a raise, it implies that good X is an inferior good, where demand decreases as income rises.
Step-by-step explanation:
If Sophia gets a raise and buys less of good X, we know that good X is an inferior good. An inferior good is one where the quantity demanded falls as income rises, and conversely, the quantity demanded rises as income falls. This behavior indicates that as Sophia's income increases, she can afford more expensive choices and tends to trim back on the cheaper alternatives that she used to purchase when her income was lower.
For instance, with a higher income, households might consume fewer inferior goods like fast food and opt for more luxurious dining options, reflecting a shift in their consumption preferences and their ability to afford better-quality products.
When a person's income increases and they choose to buy less of a certain good, it is an indication that the good is an inferior good. Inferior goods are goods for which the quantity demanded decreases as income rises. This occurs because as people's income increases, they can afford to buy more expensive goods that they prefer.
For example, let's say Sophia's income increases and she decides to buy less of good X. This means that good X is an inferior good.