Soup is considered an inferior good if the demand for soup:

• A. decreases as consumer income increases
• B. increases as consumer income increases
• C. is unaffected by changes in the price of soup
• D. remains unchanged when consumer income changes

Answer: (A)

Verified step by step guidance

1. Understand the definition of an inferior good: An inferior good is a type of good for which demand decreases when consumer income increases, and demand increases when consumer income decreases.
2. Analyze the relationship between income and demand: For an inferior good, the demand curve shifts leftward as income rises, indicating a decrease in quantity demanded at each price level.
3. Compare this with normal goods: Normal goods have demand that increases as consumer income increases, which is the opposite behavior of inferior goods.
4. Evaluate the options given: The correct description of an inferior good is that demand decreases as consumer income increases.
5. Conclude that the correct answer is the option stating 'demand for soup decreases as consumer income increases' because this matches the definition of an inferior good.