If a decrease in income increases the demand for a good, then the good is

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BlackTom AI · Accepted Answer

The question asks about the classification of a good for which demand rises when income falls. This behavior is the defining characteristic of an inferior good.

To understand this, recall the basic income-demand relationship:
- Inferior goods: when income decreases, consumers switch to buying more of these goods, so quantity demanded goes up as income falls.
- Normal goods: when income decreases, demand for these goods typically falls as well, or at least does not rise due to income alone.
- The substitution effect can also influence demand, but for inferior goods the income effect dominates in the sense described: lower income makes the inferior good more attractive relative to more expensive substitutes.

In this case, since the prompt states that a decrease in income increases demand for the good, the appropriate classification is inferior good. This behavior is inconsistent with normal goods, for which a decrease in income would generally reduce demand, not increase it. It also does not imply any special cases like Giffen goods unless the price and income effects interact in a particular way, which is not specified here.

If there were alternative options, the key distinctions would be:
- Inferior good: demand rises when income falls.
- Normal good: demand falls when income falls.
- Giffen good: a special case where a price rise leads to higher demand due to income/price effects, a different scenario entirely.
- Luxury or luxury-normal goods: typically associated with higher income leading to higher demand, not the converse.

Overall, the statement provided matches the standard definition of an inferior good, given the described income-demand relationship.

If a decrease in income increases the demand for a good, then the good is

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