Due to an increase in her rent, Isa needs to cut back her spending on other items. Which of the following types of goods will Isa consume less of?
A. substitutes
B. normal goods
C. inferior goods
D. complements
http://livingeconomics.org/article.asp?docId=289
it's D.
It's B. Sorry,
To determine which type of goods Isa will consume less of, we need to understand the different categories mentioned in the question:
A. Substitutes: These are goods that can be used as alternatives to each other. For example, if Isa usually buys apples but they become more expensive, she might choose to buy oranges instead. So, if her rent increases, it does not necessarily mean she will consume fewer substitutes.
B. Normal goods: These are goods for which demand increases as income increases and decreases as income decreases. Since Isa's rent has increased, it means her income has not changed, so she is not likely to consume fewer normal goods.
C. Inferior goods: These are goods for which demand decreases as income increases and increases as income decreases. Isa may consume less of inferior goods if her rent increases and her income remains the same. Therefore, it is possible that she will consume less of inferior goods.
D. Complements: These are goods that are typically consumed together. For example, bread and butter are complements - when you buy bread, you usually also buy butter. Rent increase is unlikely to change the consumption of complements.
Based on the information provided, it is most likely that Isa will consume less of inferior goods (option C) due to the increase in her rent. However, without knowing more about Isa's income and specific spending patterns, we cannot be 100% certain.